Brussels, 15/12/2015 (Agence Europe) - The President of the Eurogroup, Jeroen Dijsselbloem, stresses that reinforcing Economic and Monetary Union (EMU) must be achieved by making progress on reducing and sharing the financial risks.
“Deepening EMU is also about risk-sharing and also about making progress to reduce the risks”, Dijsselbloem told the plenary debate session of the European Parliament on Tuesday 15 December. He said that he was “nervous” to be speaking for the first time in his capacity as President of the Eurogroup, so much so that he made his speech from the desk of the hemicycle normally reserved for heads of state or government, as the President of the European Commission, Jean-Claude Juncker, mischievously pointed out to him.
Dijsselbloem argued that reducing financial risk by private means is “as important” as doing so by public means. He therefore called for the exhaustion application, from January 2016, of the bail-in provisions in the event of the failure of a European bank ('BRRD' directive), for limits to the national options and leeway laid down in banking prudential legislation and a reduction of the exposure of the financial institutions to sovereign risk. Making progress on these elements is “as important” as setting up the European deposit insurance system (EDIS) and a backstop for the Single Resolution Fund (SRF), the financial arm of the 'resolution' plank of banking union in the eurozone, he stressed.
This debate on sharing and reducing financial risks reflects that of the Ecofin Council, which held its first debate, on Tuesday 8 December, on the proposed EDIS, the third pillar of banking union (see EUROPE 11448). Germany argues that these risks should be reduced first of all before completing banking union, whilst other countries wish to act in parallel on the sharing and reducing of financial risks.
On behalf of the Commission, Juncker asked “what could be more urgent than protecting the savings of our citizens and reinforcing their trust in the banking system?”.
A version dated Monday 7 December of the draft conclusions on the EMU of the European summit of 17-18 December stressed that the work towards a subsequent reduction of the financial risks and cutting the ties between banking crises and public debt crises should move forward “in parallel” to the work on the EDIS. The draft text, dated Monday 14 December and of which EUROPE has had sight, goes no further than to argue in favour of rapid progress on banking union in order to improve financial stability.
Recommendation of the eurozone. During the debate, the fact that the Commission has anticipated the presentation of the socio-economic policy recommendation at eurozone level was welcomed, as this means that the Nineteen can take account of it in the adoption of their 2016 budgets (see EUROPE 11439). Roberto Gualtieri (S&D, Italy), who chairs the economic and monetary affairs committee, described this initiative as a “change of concept” which shows that the eurozone is far more than just monetary union.
The debate highlighted the divisions within the European Parliament over the socio-economic policy Europe should follow, as the MEPs were unable to adopt a common position on the budgetary process of the 'European Semester' in October (see EUROPE 11421). On the one hand, the pro-European Right is arguing in favour of increased competitiveness efforts. Over on the Left, the lack of investment and rise of social inequality have been highlighted. There is also a need for a “rebalancing mechanism” shored up by the eurozone's own budgetary capacity (as per the report of the 'five presidents': Ed), Philippe Lamberts (Greens/EFA, Belgium) stressed. A third group, made up mainly of Conservatives and Europhobes, feels that the euro is solely responsible for the flat-line growth in the eurozone. (Original version in French by Mathieu Bion)