Brussels, 19/12/2013 (Agence Europe) - The European Parliament wants the role of decision making on resolving bank problems to be for the Commission (and not for “opaque committees”) and for the Community method to be the legal basis of banking union, especially for resolution funds. “We reject the idea of a new intergovernmental agreement”, President of the European Parliament Martin Schulz stated on Thursday 19 December.
The agreement of the Ecofin Council on banking union is “very far” from the position of the Parliament's economic and monetary affairs committee, Schulz told the press. He predicted long and difficult discussions between the Parliament and the Council on the single resolution mechanism. The Parliament does not want the single resolution funds to be fed by national funds during the transitory phase.
Schulz told the European Council that “if the decisions of the Ecofin Council become reality, not only will the positive effects of banking union not be realised, but negative effects could be produced as well”: - additional costs for member states due to forced restructuring and possible recapitalisation; - incitement of banks to reduce their recapitalisation need by reducing risks, which would be translated by the cancellation of existing loans and the minimum granting of new loans; - loss of market confidence due to lack of back-up solution represented by the European stability mechanism, which can be activated in times of crisis; - the credibility of the European Central Bank would be ruined.
Convergence partnerships. These will only be democratically legitimate when the European Parliament and national parliaments, as legislators, are fully associated and can assume their control function, Schulz said. He called for them to be accompanied by a solidarity mechanism so as to reduce the social difficulties during the reform process. Such a solidarity mechanism should, in Schulz' view, be part of the Union budget (new funds). (LC/transl.fl)