Thursday

1st Oct 2020

Barroso: Banking union bill to be published next week

  • Barroso and Grybauskaite launching the Lithuanian presidency in Vilnius (Photo: ec.europa.eu)

The EU will present the next round of banking union legislation next week, the president of the European Commission said Friday (5 July).

Speaking in Vilnius, prior to the opening ceremony launching Lithuania's six month EU presidency, Commission boss Jose Manuel Barroso confirmed that the legislation would be released by the bloc's financial services commissioner, Michel Barnier, on Wednesday.

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The EU executive arm is expected to set up a common resolution authority for the eurozone to wind up ailing banks.

Ministers must agree their position by the end of the year, said Barroso, adding that the regulation was needed to "put banking union on firm foundations".

Last week, EU finance ministers reached agreement on their negotiating stance on the bank resolution and recovery directive, seen as a precursor for more integrated banking rules for eurozone countries, which includes measures to 'bail in' bank shareholders and creditors in the event of a bank crisis.

However, policy makers will have to act fast. With federal elections in Germany set to take place in late September and expected to lead to up to six weeks of talks to form a new coalition government, there is unlikely to be any movement on the proposal until November. Both Angela Merkel's CDU and the social democrat opposition are reluctant to agree to a eurozone resolution authority without treaty change.

Meanwhile, Barroso confirmed that two EU-US working groups set up to look into revelations that US security services had bugged EU institutions would start work on Monday (8 July), the same day as the first round of talks on an EU-US free trade agreement. Commission officials will represent the EU in the working groups tasked with assessing whether the data protection and privacy rights of Europeans had been breached. However, questions relating to spying for national intelligence purposes would be dealt with by member states dealing directly with the US, he said.

The Lithuanian presidency marks the first time that one of the three baltic countries has had control of the EU's legislative machine, and the Lithuanian government has made it clear that it intends to devote some its political capital to the EU's relations with eastern Europe.

In particular, Lithuanian officials are keen to sign off on an economic association agreement between the Ukraine and the EU amid concerns that failure to bring the Ukraine closer to the EU could help drive Viktor Yanukovych's government into the arms of Russia.

Lithuanian president Dalia Grybauskaite commented that the Ukrainian government had "at least three urgent pieces of homework" to do before a deal could be reached, identifying selective justice, judicial independence and electoral reform as the main items of contention.

"Provided they do their part of the job, they should be offered closer economic integration," added Barroso.

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