Brussels, 14/07/2015 (Agence Europe) - During a debate on the report of the 'five presidents' on the Economic and Monetary Union (EMU), on Tuesday 14 July, the European finance ministers stressed the importance of first of all applying the rules which have already been approved to reinforce economic governance.
“Before we develop the EMU any further, we have to apply what has already been agreed”, said Luxembourg finance minister Pierre Gramegna. He referred to the transposition of the 'BRRD' directive, which harmonises the national restructuring regimes, the setting in place of bridge financing and a backstop for the Single Resolution Fund in the framework of banking union. The same goes for the application of the 'budgetary pact', the treaty instituting increased budgetary discipline by means of a 'debt brake' throughout the EU, with the exception of the United Kingdom and the Czech Republic.
This position is shared by many member states. Germany and Portugal said so explicitly on Tuesday. The opinion was shared in talks on the report by the 'five presidents' held the day before at the Eurogroup, according to its president, Jeroen Dijsselbloem.
The ministers, who are keenly aware that they are on dangerous ground, given public opinion which is generally not in favour of any subsequent transfers of skills to the European level, argued in favour of moving forward on the grounds of the latest fall-out of the Greek crisis. A number of projects which can be implemented in the short term and without having to change the treaties will be set in place, among those identified by the European Commission (see EUROPE 11348 and 11340).
Completing banking union. On Monday, Dijsselbloem noted “strong support for the completion of banking union” in the eurozone. Gramegna said that this can be brought about by means of a legislative proposal to set in place, in the near future, a European reinsurance system for the national bank deposit guarantee schemes, as the idea of a “pan-European deposit guarantee” scheme could only be a long-term project. “A deposit guarantee scheme at European level will take time” and could only be set in place in the second phase of the consolidation work for the EMU, said Valdis Dombrovskis, the European Commissioner for the Euro. Speaking on behalf of the ECB, Vitor Constâncio argued in favour of a scheme “identical” to the one in place in the United States covering “1% of total deposits”, but without being able to absorb any banking crisis. Germany, which is reluctant to pool banking risks, stressed the importance of the bail-in rules laid down in the 'BRRD' directive. These rules, which will apply from 2016, will put shareholders and creditors in the front line in the event of a banking crisis, before any public money is mobilised.
The president-in-exercise of the Ecofin Council argued that strengthening the EMU is a dossier which the member states must tackle in a group of 19 and in a group of 28, given its implications for “the single market”. He also stressed the importance of bulking up the “social dimension” of the EMU. This kind of approach could be set in place through the increased involvement of the social partners and the creation of social indicators to be taken account in the framework of the budgetary process of the 'European Semester'. Echoing these considerations, the Italian finance minister, Pier Carlo Padoan, welcomed the fact that at the Eurogroup meeting, several ministers had stressed the importance of putting the 'economic and social' and 'monetary' dimensions of the EMU “side by side”.
Franco-German proposals coming soon. On Bastille Day, François Hollande, said in a televised interview that the eurozone should have “more solid bases” and “more robust means of action”. Announcing a forthcoming Franco-German initiative, he argued in favour of a “eurozone budget” to promote investment, “fiscal and social convergence” which would protect more than the creation of a “eurozone parliament”. (Mathieu Bion)