Brussels, 16/09/2013 (Agence Europe) - On Monday 16 September, EU Internal Market Commissioner Michel Barnier urged MEPs to act fast to boost the solidity of the financial sector.
Back from the Ecofin Council in Vilnius (see separate article), the commissioner stressed the importance of rapid progress on banking union by adopting the legislation to set up a single bank resolution mechanism (SRM) and harmonise national bank resolution rules (the BRRD Directive). Nobody disagreed in Vilnius with the fact that a single resolution mechanism was needed, although the debate had focussed on the legal foundation of the draft legislation with concerns about legal certainty being expressed by Germany and other countries, which he said he understood. He was answering a question from Peter Simon (S&D, Germany), pointing out that the Commission and Council of Ministers' lawyers believe that Article 114 of the EU treaty (on the single market) provides an adequate basis for the SRM rules. The Commissioner did not rule out changes at a later stage to improve the SRM by giving the European Stability Mechanism (ESM) the job of acting as the resolution authority if it is made an EU instrument by changing the EU treaty.
In its proposal, the Commission gives itself the role of triggering a bank resolution, based on a recommendation from the SRM committee of national competent authorities (see EUROPE 10885). In response to a question from Elisa Ferreira (S&D, Portugal), the commissioner said that the Commission was not trying to grab the job of being the single resolution authority, but an institution was needed to press the button and, looking around to see which body could act speedily, he had found that it was the Commission. He said he had told the ministers that, if they had a better option, then they should give it to him so it could be examined.
Commenting on the single bank resolution fund that the Commission wants to be set up, Barnier said that it would take time for the fund to gain enough funding. He described as “interesting” an idea from Jörg Asmussen (member of the ECB Executive Board) of the resolution fund borrowing money from the ESM while awaiting full finance from the banks. Other options include drumming up capital from the money markets.
Asset quality review. Philippe Lamberts (Greens/EFA, Belgium) expressed concern about the credibility problems that might arise if the ECB takes too easy a line in its bank assessments or if member states are not prepared to recapitalise the banks that need it. Barnier said that the ministers were well aware of the problem vis-à-vis backstops.
In answer to a question from Wolf Klinz (ADLE, Germany), the commissioner said he was aware of the loss of some players to shadow banking. Asked by Syed Kamall (CRE, United Kingdom) to call for convergence of international accounting standards, Barnier said that Europe's patience with the United States had its limits, which had almost been reached. Finally, Barnier said that the Commission would take action immediately if the Court of Justice decided that the emergency powers granted to ESMA went beyond the powers granted by Article 114 of the EU Treaty (see EUROPE 10921). (MB/transl.fl)