Saturday

4th Feb 2023

US-style 'financial socialism' not an option for Europe

The EU's economic and monetary affairs commissioner, Joaquin Almunia, has said Europe should not employ what he called "financial socialism" to solve the ongoing banking crisis by bailing out failing companies.

"Socialists like me, we are against financial socialism," he said, alluding to the multi-billion-dollar supports and nationalisations of recent weeks that Washington has engaged in to save a host of financial institutions it argues are "too big to fail."

Read and decide

Join EUobserver today

Become an expert on Europe

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

... or subscribe as a group

  • Commissioner Almunia wants greater co-ordination amongst European financial supervisors (Photo: European Community)

The commissioner - a member of Spain's centre-left Socialist Workers Party - speaking at a Madrid conference organised by Spanish bourse regulator CNMV, did nonetheless say such measures were warranted where the financial system as a whole was threatened, however.

"No one can say that there won't be anyone in Europe who will have to face a solvency problem that poses a systematic risk to the financial system," he said, according to Dow Jones Newswires.

Despite his veiled criticism of how the Bush administration has responded to the crisis, he said Europe was prepared to step into markets if the situation ever deteriorated to such a level.

"The economic authorities, financial authorities and central banks are prepared if that case were to occur in Europe," he said. "I hope it won't happen in Europe, but no one can rule it out either."

"During a financial crisis, there are different types of support, with public funds, taxpayers, which are justified by the systemic risk," he added, reports Reuters.

The commissioner said the current upheaval may continue for some time. "We still have no idea how long this turbulence will last and when normality will return to the markets."

He also said dealing with the crisis required greater co-ordination by European financial authorities.

"We need more coordinated action by supervisors than currently exists ... We must move forward faster, we cannot wait until a financial institution operating in seven or 10 countries of the European Union has problems such as those of Lehman Brothers or Bear Sterns."

In separate news on Thursday, central banks worldwide pumped €126 billion into markets in an attempt to boost liquidity.

The money was released by the US Federal Reserve to five other central banks who then made it available to financial institutions domestically.

The European Central Bank is to make €39 billion available and the Bank of England €28 billion. The Swiss National Bank and the Bank of Canada also participated in the operation.

Hawkish ECB rate-rise 'puts energy transition at risk'

The European Central Bank raised interest rates by another 0.5 percent to a 14-year high, and expects to hike rates by another half percent in March. But what does that mean for the green transition?

Polish backpedal on windfarms put EU funds at risk

Draft legislation in Poland aimed at relaxing some of Europe's strictest laws surrounding onshore wind-turbines has been derailed by a surprise last minute amendment, which could put Poland back on a collision course with the EU.

Opinion

More money, more problems in EU answer to US green subsidies

Industrial energy-intense sectors, outside Germany and France, will not move to the US. They will go bust, as they cannot compete in a fragmented single market. So to save industry in two member states, we will kill the rest?

Latest News

  1. Greece faces possible court over 'prison-like' EU-funded migration centres
  2. How the centre-right can take on hard-right and win big in 2024
  3. Top EU officials show Ukraine solidarity on risky trip
  4. MEPs launch anonymous drop-box for shady lobbying secrets
  5. Hawkish ECB rate-rise 'puts energy transition at risk'
  6. MEPs push for greater powers for workers' councils
  7. How Pavel won big as new Czech president — and why it matters
  8. French official to take on Islamophobia in EU

Stakeholders' Highlights

  1. Party of the European LeftJOB ALERT - Seeking a Communications Manager (FT) for our Brussels office!
  2. European Parliamentary Forum for Sexual & Reproductive Rights (EPF)Launch of the EPF Contraception Policy Atlas Europe 2023. 8th February. Register now.
  3. Europan Patent OfficeHydrogen patents for a clean energy future: A global trend analysis of innovation along hydrogen value chains
  4. Forum EuropeConnecting the World from the Skies calls for global cooperation in NTN rollout
  5. EFBWWCouncil issues disappointing position ignoring the threats posed by asbestos
  6. Nordic Council of MinistersLarge Nordic youth delegation at COP15 biodiversity summit in Montreal

Join EUobserver

Support quality EU news

Join us