Wednesday

5th Aug 2020

Opinion

Banking union: No supervision without representation

  • Non-euro MEPs are wary of the creation of a two-speed Europe on the back of the crisis (Photo: EuroCrisisExplained.co.uk)

On 12 September the European Commission is to present first proposals on the banking union, which is the central element of the strategy to stabilise the economic situation in the eurozone.

During the EPP Group meeting in Florence, Commission President Barosso assured us that the single supervision mechanism will be open to all member states, including those which are not yet members of the eurozone. But can these states really agree to a mechanism where the European Central Bank is in control, yet they are not represented in its structures? It is likely that this is the choice they will be faced with.

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The force behind the creation of a banking union is the eurozone crisis. But the implementation of this mechanism will have a substantial impact - also in financial terms - on the functioning of the banking sector across the Union. Let us not forget that in Slovakia, Hungary and the Czech Republic around 90 percent of banks are owned by banks from the eurozone. In Poland it is almost 70 percent of financial institutions. How will these markets be affected, if the parent bank is being supervised by the ECB, but the subsidiary bank is not - at least not directly?

It seems that it would be better to be under the umbrella of the banking union with all of its future elements, including the banking resolution fund and the deposit guarantee. We must ensure, however, that the non-eurozone member states and their interests are represented on an equal footing. The banking union project must not have negative spillovers on the non-eurozone member states.

Europe's unity and equality between member states must not be afterthoughts of the eurozone countries appearing only when we remind them. Nor should they be empty promises, while the solutions implemented exclude those not in the monetary union from the decision-making process of the supervision system being put into place. The only hope for negotiating an adequate representation of the non-eurozone countries lies in the fact that these decisions require unanimity among all 27 member states.

There are some proposals which seem to go into the direction of excluding the non-eurozone member states, creating a two-speed Europe with separate institutions for the eurozone. Germany's Handelsblatt newspaper recently wrote of potential plans to create a a separate parliament for the eurozone member states. Since the onset of the crisis the European Parliament has consistently rejected such proposals.

Undermining the integrity of the internal market and creating divisions within the Union will not help us get out of the crisis in the long-term. Nor will creating a new, divisive institution bring the Union closer to its citizens.

The writer is a Polish centre-right member of the European Parliament.

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

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