Brussels, 16/10/2012 (Agence Europe) - MEPs on the European Parliament's Economic and Monetary Affairs Committee sent the European Council an outline of their view of a stronger Economic and Monetary Union (EMU) when they adopted a draft resolution on Monday 15 October by Marianne Thyssen (EPP, Belgium) (see EUROPE 10692). The amendments they tabled suggest that they are not so keen on unconditionally making the European Central Bank the common bank supervisory body for the eurozone and do not think this new mechanism should necessarily cover all banks. The draft resolution boosts democratic legitimacy measures, giving the Parliament a key role in this domain. In a press release, Thyssen says that in the light of the lessons from the euro crisis, all four branches of EMU need to be strengthened - financial, budget, economic and democratic.
The MEPs understand that the first priority is to introduce a bank supervisory system in the eurozone as soon as possible, but any references to the ECB as the common bank supervisor have been removed from the initial draft of the report. The report now says that the supervisory body would have the power to monitor lending institutions in countries involved in the single bank supervision mechanism with a clear division of labour between national and EU level depending on the size of the bank, its commercial model and the nature of the work. Reference to maximum coverage of eurozone banks has been removed from the draft resolution.
The MEPs are aware of the current hostility to the idea from countries that are not yet in the euro because they fear that they would have no influence over the scheme if they joined it, because it is to be run by the ECB (see EUROPE 10708). These countries say the new EU bank supervisory mechanism should enable any member state to join by allowing those outside the euro to have 'equal rights and equal obligations.'
The Economic and Monetary Affairs Committee wants the European bank supervisory system to regularly report back to the Parliament and the Council of Ministers. The Parliament should approve the nomination of the head of the board of governers and should have the right of investigation.
Thyssen's initial suggestion of setting up two European funds - a savings guarantee system and a fund for bailing out struggling banks - has been dropped. The draft resolution now simply calls for harmonised rules for national savings guarantee funds with the option of an EU fund being explored only when the common bank supervisory system is up and running and bank bailout schemes have been harmonised.
The Parliament wants legislation to hive off risky trading from retail banking, as recommended in the Liikanen Report (see EUROPE 10701).
For the budget side of EMU, the MEPs call for tight application of the Stability and Growth Pact (the six-pack) and the soon-to-be-introduced two-pack. They want the treaties setting up the European Stability Mechanism (ESM, the eurozone's permanent bailout fund) and the fiscal compact (Budget Pact) to become part of the full EU system (rather than intergovernmental agreements). The Parliament says that any further powers for the Euro Commissioner should be accompanied by greater power for the Stability and Growth Pact to call him or her to account. The Stability and Growth Pact wants to hold regular hearings of the troika of lenders (the European Commission, European Central Bank and International Monetary Fund).
Social Pact. The Social Democrats are particularly pleased with the introduction into the draft resolution of a recommendation about a Social Pact to balance the impact of stricter budget and economic surveillance. Liêm Hoang-Ngoc (S&D, France) said: “Thanks to pressure from the Socialists and Democrats, the European Parliament can now send a clear message to the EU leaders, just a few days before their summit on Thursday, that economic recovery needs a social recovery.” He said the social pact for Europe should include the following practical measures: a) youth employment, including initiatives such as the European Youth Guarantee; b) high-quality public services with appropriate financing; c) decent living wages; d) access to affordable and social housing; e) a social safety net to guarantee universal access to essential health services regardless of income; f) a social protocol to protect fundamental social and labour rights; g) European standards for managing restructuring in a socially responsible way; h) a new health and safety strategy that includes stress-related diseases; and i) equal pay and equal rights for work of equal value. (MB/transl.fl)