Brussels, 27/01/2014 (Agence Europe) - Slovak Finance Minister Peter Kazimir says that the drawing up of an intergovernmental agreement to set up a single bank resolution fund (SRF) is legitimate in terms of democracy because it will be ratified by national parliaments.
On the fringes of the Tatra Summit on Monday 27 January, Kazimir said: “It took a long time to get a compromise. We have to be realistic. The European Parliament has to understand that intergovernmental treaty is also based on ratification by national parliaments Legitimacy will be there at the end”. He said there were three priorities for the creation of the bank single resolution mechanism (SRM), namely preserving budget sovereignty, striking a balance between bank home and host countries in the first decisions taken by the resolution board, and ensuring that most of the costs of winding up a bank are paid by banks themselves.
The EP is co-legislator on this, the most important area of work at the end of this parliaemnt. Backed by the European Commission and the ECB, the EP is very critical of the member states' desire to set up the SRF on an intergovernmental basis. The funds for the SRF would be provided by banks and are be expected to be around the €55 billion mark by 2026 (see EUROPE 11004).
During the ratification process for the eurozone's European Financial Stability Fund (EFSF), the temporary fund now replaced by the ESM, the Slovak government found it very difficult in the autumn of 2011 to get its parliament to ratify the treaty establishing the EFSF. The matter led to the defeat of the Centre-Right government under Iveta Radicova.
On behalf of the European Commission, Jonathan Faull called for an intergovernmental treaty that was as limited as possible, in other words that only covered how the bank contributions were to be collected for the SRF, which will be divided into national compartments, which would then gradually be pooled.
A shorter transition period? Several member states called for a reduction in the ten-year transition period for the SRF getting up to strength. Kazimir told this newsletter: “I can imagine it. We are waiting for the 'stress tests', we have to go through the first stage and later on we can hurry a little bit”. Arriving at the Eurogroup, Irish Finance Minister Michael Noonan said the ECB's “yes to a shorter transition period for the SRF” “had started a debate again”.
Speaking at the Tatra Summit, ECB Vice-President Vitor Constancio said that the draft legislation should be amended over time so that a genuine banking union can be set up. He said a decision-making process was needed that would enable Europe to take emergency action - within 24 hours if necessary. Similarly for a new instrument to give SRF access to enough cash when it is initially set up. He said it had to be made clear that the SRF would be able to borrow money and guarantees are needed to ensure the fund can drum up money on the money markets. (MB/transl.fl)