8th Dec 2023

Ministers at odds on bank rescue rules

Eurozone finance ministers remained far apart on Monday (14 October) in the latest stage of negotiations on a banking union.

Eurogroup chair Jeroen Dijsselbloem asked "how much time do you have" when questioned about the hurdles facing the regime, adding that concerns existed about the creation of bank resolution funds and upcoming reviews of bank balance sheets.

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

Talks on the single resolution mechanism (SRM), tabled by the Commission in July, are at an early stage but have already courted controversy.

Earlier this month, an opinion by EU lawyers representing governments questioned the legality of the proposal.

Germany is leading a group of countries keen to avoid the creation of a single fund, potentially backed by the EU's bailout fund, the European Stability Mechanism, to cover the costs if a bank get into difficulties.

France takes a different line.

"France defends the possibility of using the European Stability Mechanism as a backstop within the banking union," said finance minister Pierre Moscovici.

Dijsselbloem mooted the possibility of the ESM offering "bridging finance" to countries unable to finance their own bank rescue programmes.

Meanwhile, an EU official commented that the ESM would probably be allowed to pay loans to national funds but downplayed the prospect of a swift decision on the matter.

"We are still some way away from having to do something to reassure markets," he said.

Some governments are anxious that the long-awaited review of eurozone banks, set to take place in the coming months, will reveal large funding gaps on their balance sheets prompting more market panic about the financial stability of the bloc.

However, an EU official working on the reforms told this website that the stress tests would not uncover "major surprises".

"The situation is much better than it was at the beginning of 2012," the official said, adding that "banks should be able to raise capital on the markets and those that can't should have been identified by now."

For their part, MEPs on the Economics committee debated their draft report on the bill on Monday (14 October).

Under the proposal by centre-left deputy Elisa Ferreira, who has been tasked with drafting the Parliament's position, the legislation would set up a "public loan facility" to provide a credit line to both national and European funds.

A majority of MEPs is also keen to ensure that the EU's 6,000 banks are all covered under the regime.

The parliament aims to keep up the pressure on governments by voting their position on the bill in November.

Ministers were aiming to reach agreement on the rules in December, said Dijsselbloem, while economic affairs commissioner Olli Rehn added that it was "essential to maintain the momentum on banking union" by concluding the resolution mechanism.

Spain's Nadia Calviño backed to be EIB's first female chief

With less than a month to go before the start of a new leadership of the European Investment Bank, the world's largest multilateral lender, the path seems finally clear for one of the candidates, Spanish finance minister Nadia Calviño.


Is there hope for the EU and eurozone?

While some strengths may have been overlooked recently, leading to a more pessimistic outlook on the EU and the euro area than the truly deserve, are there reasons for optimism?

Latest News

  1. EU suggests visa-bans on Israeli settlers, following US example
  2. EU ministers prepare for all-night fiscal debate
  3. Spain's Nadia Calviño backed to be EIB's first female chief
  4. Is there hope for the EU and eurozone?
  5. Crunch talks seek breakthrough on EU asylum overhaul
  6. Polish truck protest at Ukraine border disrupts war supplies
  7. 'Green' banks lend most to polluters, reveals ECB
  8. Tense EU-China summit showdown unlikely to bear fruit

Stakeholders' Highlights

  1. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  2. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  3. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  4. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?
  5. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  6. UNOPSFostering health system resilience in fragile and conflict-affected countries

Join EUobserver

Support quality EU news

Join us