Thursday

28th Mar 2024

EU banking deal set for 'long, complicated' talks with MEPs

European Parliament President Martin Schulz has warned member states that their just-agreed deal on banking union lies far below MEPs' ambitions and will be subject to lengthy negotiations.

"These decisions are rather remote from what the MEPs in the economic and monetary affairs committee have agreed," Schulz said Thursday evening (19 December).

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

After difficult talks, EU finance ministers on the eve of the summit reached a compromise on how banks should be wound down in future - seen as essential to stop future financial crises.

But critics say the agreement is vague in many places and highly complex in others, meaning that the essence of the bank union - being able to quickly wind down a bank and to have a fund to do it with - is missing.

Speaking after addressing the leaders on the "worrying direction" they have taken, Schulz said "the negotiations with the European parliament will be long, difficult and complicated."

He said the issue is about the fundamental question of whether a common project is made on a communitarian basis - involving the EU institutions - or on an intergovernmental basis.

EU states have said that a single fund resolution fund should be built up to a capacity of €55 billion over 10 years using bank levies and that decisions on a failing bank will be taken by a multi-armed resolution board. The board itself is to be established as part of a treaty agreed between governments.

"We reject the idea of a further intergovernmental treaty," Schulz told leaders.

He also said that the ministers' promise to find a solution among themselves should money be needed before the €55 billion is in place is "not concrete."

MEPs want the European Stability Mechanism - the eurozone bailout fund - or the EU budget to be available as a backstop, something that is a no-go for Germany.

Meanwhile, Schulz likened the fact that it is set to take over 100 people to deliberate on whether a bank should be shut down to going to hospital and being treated by the administrative board rather than a doctor.

"If a bank cannot be wound up within a weekend in order to prevent a run on the banks, the system is too complicated. In other words, the commission must play a central role here," he said.

The extent of the EU commission say in the whole process was a key area of dispute among member states. They eventually opted to give it a minor role.

But although Schulz has warned about lengthy negotiations, there is an external timetable.

Both sides are keen to hammer out a deal before EU elections in May.

EU ministers clinch deal on failed banks

EU ministers have agreed new rules on how to wind up failed banks - the key pillar of a "banking union" designed to stop a repeat of the crisis.

'Swiftly dial back' interest rates, ECB told

Italian central banker Piero Cipollone in his first monetary policy speech since joining the ECB's board in November, said that the bank should be ready to "swiftly dial back our restrictive monetary policy stance."

Opinion

EU Modernisation Fund: an open door for fossil gas in Romania

Among the largest sources of financing for energy transition of central and eastern European countries, the €60bn Modernisation Fund remains far from the public eye. And perhaps that's one reason it is often used for financing fossil gas projects.

Latest News

  1. German bank freezes account of Jewish peace group
  2. EU Modernisation Fund: an open door for fossil gas in Romania
  3. 'Swiftly dial back' interest rates, ECB told
  4. Moscow's terror attack, security and Gaza
  5. Why UK-EU defence and security deal may be difficult
  6. EU unveils plan to create a European cross-border degree
  7. How migrants risk becoming drug addicts along Balkan route
  8. 2024: A Space Odyssey — why the galaxy needs regulating

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Join EUobserver

EU news that matters

Join us