Europe to take bank levy proposal to G20
EU leaders meeting in Brussels on Thursday (17 June) reached a broad agreement to push ahead with a system of national bank levies, one week before the topic is up for debate at a G20 leaders' meeting in Toronto.
"We have a common position of all the European countries, and we are determined to defend it in Toronto," European Council President Herman Van Rompuy told journalists after the one-day summit came to an end.
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However final conclusions indicate that the Czech Republic "reserves the right not to introduce these measures." It is understood that Prague wants to see the exact details of what is going to be taxed before signing up to the scheme, and also harbours concerns that the tax will merely be passed on to customers.
European representatives at the global agenda-setting meeting may also have a tough time convincing countries such as Brazil and China, which were not forced to bail out failing banks, on the merits of the bank levy scheme.
Exact details of the system intended to "ensure burden-sharing and to set incentives to contain systemic risk" still need to be worked out, leaders indicated in the meeting's final conclusions.
Analysts have previously warned that any system that forces banks to put money aside for future bail-outs may actually prove an incentive for risky behaviour.
In another bid to restore confidence in the union's financial system, member states agreed that the results of ongoing stress tests on the region's top banks should be made public.
The tests "must be demanding", Spanish Prime Minister José Luis Rodríguez Zapatero said as Madrid prepares to wrap up its six-month rotating presidency. "We need to look at the most stringent tests possible because it will provide the most credibility."
The embattled Spanish leader who defended his government's unpopular package of labour market reforms, announced on Wednesday, said talk of Madrid calling on the eurozone's financial support mechanism was "just rumours", adding that a meeting with IMF director Dominique Strauss-Kahn on Friday was simply to explain the recent reforms.
France and Germany failed to win enough support for their financial transaction tax proposal. "Some in the council are not totally enthusiastic about it," French President Nicolas Sarkozy told a briefing afterwards, adding that the two countries were "ready to put it in place, even if other European governments have problems with it."
In his first visit to Brussels as UK Prime Minister, Conservative leader David Cameron rammed home the message that tougher penalties for countries that breach the EU's budgetary rules should not apply to non-eurozone states.
"Our bottom line is that I do not support a transfer of power to Brussels," said the Tory leader, adding that single currency members were free to instate any reforms they felt necessary. "We want a strong eurozone to be a good customer for UK exports," he told journalists.
Plans for a 'peer review' of member state budgets before national parliaments "take account of national budgetary procedures", say final conclusions, another move to appease British concerns.
Language on increased scrutiny of member state debt levels leaves open the possibility of factoring in private sector debt into the equation, a key Italian demand.
In a clear indication that the commission is determined not to cede its right of initiative to an increasingly forceful European Council under Mr Van Rompuy, commission chief Jose Manuel Barroso said the body would come forward with further details on increased budgetary discipline on 30 June.
This will be followed up with a first set of legislative proposals in September, one month before Mr Van Rompuy's taskforce on economic governance produces its report. "There is a community process we have to move forward," one EU official told this website.
EU leaders also signed off on the bloc's 10-year strategy for sustainable growth, known as Europe 2020, prompting Mr Barroso to express his complete satisfaction, despite the plans frequently criticised lack of strong implementation tools.