Münchau, W., (2013), “An exercise in prolonging a banking credit crunch”, The Financial Times, 22 December.
The lousy agreement on banking union will produce the financial sector equivalent of austerity
The agreement on a eurozone banking union is neither a glass half full, nor half empty. As many commentators are saying, last week’s deal is hideously complex, and a common resolution mechanism without a fiscal backstop for failed banks is pointless.
Those technical deficiencies apart, the agreement raises two broader, more important questions: why do countries keep on accepting such lousy deals in the first place? (Or to use a seasonal metaphor, why do turkeys keep on voting for Christmas?) And what are the long-term consequences of their actions?
To answer the first question, it is worth looking at how the debate evolved. Ahead of the negotiations several finance ministers called for a common fiscal backstop that could provide a credit line to the resolution fund. It was a reasonable request. Yet that is precisely what they did not get. All they got were some warm words from Germany that there would be further talks about a backstop within 10 years. Some of the finance ministers tried to put a brave face on this humiliating defeat, pretending that Wolfgang Schäuble, the German finance minister, had given ground on an important principle.
But that is not the case at all. The banking union that was agreed was the banking union Mr Schäuble always wanted. He does not want German taxpayers to pay for the restructuring of banks in other countries. And he does not want the European Commission, or anybody else, to close down a German bank. If ever there was a game, set, match victory in EU history, this was it.
So why did the others accept it?
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Σχετικές Αναρτήσεις
- Stiglitz, J., (2013), “An Agenda to Save the Euro”, Project Syndicate, 04 December.
- Wolf, G., (2013), “Europe rightly pursues the road to a single resolution mechanism”, Bruegel, 27 November.
- Mody, A., (2013), “A Schuman compact for the euro area”, Bruegel, Bruegel Essay and Lecture Series, November.