Brussels, 11/09/2013 (Agence Europe) - At their informal meeting in Vilnius on Friday 13 September, European finance ministers will work on banking union.
This is the first meeting of European finance ministers since the European Commission unveiled its draft bank resolution mechanism legislation in July (see EUROPE 10885), the second arm of banking union (along with the common bank supervision mechanism). The Lithuanian Presidency aims to pull out all the stops at the Council of Ministers to be able to open formal talks with the European Parliament in December, a European source explaining that no great progress was to be expected because of the German general elections later this month. Germany says the draft rules give too much power to Europe, in violation of the EU treaty. The source said that it would be good to get a feel of member states' views at the meeting in Vilnius.
Joined by the heads of central banks, the European finance ministers will examine the economic situation. The latest figures from Eurostat show an improvement in the first half of the year with gentle recovery in the eurozone (growth of 0.3% of GDP) and the EU28 (growth of 0.4%). Europe is subject to a number of downside risks, like segmentation of the banking sector. The ministers and bank governors will be asked for their views on the best way to prepare for the assessment of bank assets by the ECB in its new role as European bank supervisor, and also on the new batch of stress tests by the European Banking Authority (EBA). In this connection, they will also look at finance for small businesses and joint EIB-Commission measures.
The ministers will have a debriefing on the G20 and prepare for the G20 Finance summit in Washington in October on the fringes of the IMF and World Bank AGMs.
Cyprus. The eurozone ministers will examine progress in Cyprus and the only decision they are expected to make in Vilnius is about whether to grant the country €1.5 billion to recapitalise cooperative banks. An EU source says that the ministers will give an unproblematic go-ahead to this third aid payment. The Eurogroup will examine the first troika assessment report on Cyprus (the troika being the European Commission, ECB and IMF).
The ministers will discuss progress in Portugal and Greece. A troika assessment of the two countries is expected in the next few weeks. Next week, the troika will travel to Athens to see whether Greece has implemented the four steps seen as a prerequisite for the payment of the next sub-batch of aid (€500 million), but the aid decision will be made by the Council of Ministers' Euro Working Group. The ministers are not expected to discuss the shortfall in funding for the Greek programme expected to emerge by the end of 2014 or how to fill the financing gap until the end of the IMF's financing for Greece in 2016.
Automatic exchange of tax information (AEI). The automatic exchange of bank information will become the norm in the EU in 2015 and its compatibility with the standards being drawn up at OECD level for extending AEI around the world will be the focus in the ministers' discussions. The politicians are expected to agree that the AEI rules at EU level (the future revised directive on administrative cooperation in the fiscal domain) and practical tools for implementing it (agreements, standards, rules, standard electronic forms) should comply with existing international mechanisms like those laid down in the United States' FATCA rules and the new global standard for the exchange of bank information to be developed over the next few months by the OECD. The ministers will ensure that progress at the EU is in step with developments at the OECD vis-a-vis the scope of legislation and the timeline for new rules coming into force. In parallel, they are also expected to agree on a common position at the OECD to ensure that new AEI rules at global level (agreements, rules and forms) are based as far as possible on those in force in the EU in order to make substantial cost-savings. (EL and FG/transl.fl)