Tuesday

23rd Jul 2019

EU commission wants banking union in 2018

The European Commission is piling on pressure to complete the banking union, first proposed in 2012, by the end of next year, as part of a broader plan to prevent a repeat of the financial crisis.

EU commission vice-president Valdis Dombrovskis told reporters in Brussels on Wednesday (11 October) that the aim, among other things, is to make sure taxpayers are not first in line to pay for a banking crisis.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

"As long as financial ties between banks and their sovereigns remain as close as they are today, there is still unfinished business," he said.

Neither the Council of the EU, representing member states, nor the European Parliament, have managed to reach an agreement on the banking union despite around two years of talks.

The commission is now hoping to speed up the co-legislators by putting forth a series of measures, described by Dombrovskis as "ambitious but realistic" in terms of getting the banking union up and running in 2018.

"We hope that today's proposals will serve as food for thought for the co-legislators," he said.

But the EU commission's ideas appear to water down state access to safety nets and reduce the sharing of banking risks, which may be part of an effort to appease German demands.

First, it is asking co-legislators to adopt the risk reduction measures that had been presented last November.

Second, it also wants to further reduce the share of bad bank loans, so-called non-performing loans (NPLs). Since mid-2014, the share of bad loans have been reduced from 6.7 percent to 4.5 percent.

"We need to accelerate this trend and prevent the stock from building up again," noted Dombrovskis.

The EU executive wants to reach a consensus on a European deposit insurance scheme or EDIS, which would collect funds from banks to guarantee each depositor around €100,000.

The commission is proposing a gradual phasing in of EDIS, as a means of also unblocking talks between the co-legislators. This includes making EDIS conditional on a bank health checks "to confirm legacy issues from the crisis have been dealt with."

It wants a so-called "backstop" or safety net - already agreed some four years ago but not yet operational - to guarantee the stability of the single resolution mechanism, which helps to restructure failing banks.

"As a last-resort tool, this backstop would only intervene after private creditors have born losses," said Dombrovskis.

He noted that support has emerged among eurozone finance ministers in the Eurogroup to use the European Stability Mechanism (ESM) - the Luxembourg-based eurozone emergency fund - as a safety net for a single resolution fund.

The commission is set to follow up on the ESM idea in December, in a separate package on deepening Europe's and the EU's monetary and economic union.

On Wednesday, it also proposed plans to help banks diversify their holdings on sovereign bonds, and issued a report on the single supervisory mechanism.

Analysis

Juncker's euro-push could risk unity, warns eastern flank

The EU Commission chief hopes that as Emmanuel Macron pushes for euro area countries to integrate further creating a multi-speed Europe, central European members will be more inclined to join the single currency. Are they?

Eurogroup closes Schaeuble era

Eurozone finance ministers bade farewell to their longest-serving and most influential colleague, while preparing to also replace its chairman at the end of the year.

EU hesitates to back France over US tariff threat

France has passed a new tax on tech companies that will affect US global giants like Facebook. Donald Trump has threatened retaliatory tariffs over it. The EU commission says it will "coordinate closely with French" on the next steps.

News in Brief

  1. UK foreign office minister quits ahead of Johnson as PM
  2. AKK to boost Bundeswehr budget to Nato target
  3. Police arrest 25 after Polish LGBT-march attack
  4. Ukrainian president's party tops parliament election
  5. EU interior ministers to meet in Paris on migration
  6. Schinas nominated as Greek commissioner
  7. Sea-Watch captain hopes for change in EU migrant rules
  8. Russia willing to join EU payment scheme on Iran deal

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  2. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  3. Nordic Council of MinistersNo evidence that social media are harmful to young people
  4. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  5. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  6. Nordic Council of MinistersEducation gets refugees into work
  7. Counter BalanceSign the petition to help reform the EU’s Bank
  8. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  9. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  10. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  11. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  12. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North

Latest News

  1. As Johnson set to become PM, ministers pledge to resign
  2. Poland's PiS prepares 'failsafe' for October election
  3. Abortion Wars
  4. EU goes on holiday as new UK PM arrives This WEEK
  5. Survey: Half of EU staff 'don't know' ethics rules
  6. Von der Leyen signals soft touch on migrants, rule of law
  7. Timmermans: von der Leyen will be tough on rule of law
  8. Timmermans trolls 'idiot' Brexit negotiators

Join EUobserver

Support quality EU news

Join us