Brussels, 08/11/2013 (Agence Europe) - On Friday 8 November, EU Internal Market Commissioner Michel Barnier took advantage of a visit to Cyprus to stress the importance of banking union in addressing eurozone weaknesses very evident in the situation in which Cyprus finds itself and to give encouragement to the country, which is facing a severe economic and financial crisis.
The way Barnier sees it, Cyprus is suffering from problems common to the Eurozone, like lack of appropriate supervision of the financial system, the absence of rules for dealing with a failed bank and the fact that monetary union is not accompanied by economic union. The ECB will soon start directly supervising 130 banks in the banking union zone, four of them in Cyprus. Common bank resolution rules are being drawn up by Brussels, but if banking union had been in place earlier, some of the negative consequences of the crisis could have been avoided, he said, and, although it might not have been possible to avoid the winding up of Laiki, the second-largest Cypriot bank, it would at least have been better organised.
Following the agreement in March on the Cypriot aid programme, the island had to introduce restrictions on the movement of capital, the first ever in the eurozone. Barnier welcomed the adoption of a roadmap for the lifting of the restrictions, but recommended a cautious approach because the aim is to restore financial stability, which is only possible with healthy and sufficiently capitalised Cypriot banks. Significant progress has been made, he said, but more work needs to be done. Barnier noted the importance of the privatisation law and implementing the anti-money-laundering action plan, as specified in the Cypriot aid programme. (EL/transl.fl)