EU finance ministers agreed to consider examining EU treaty change
Concern in Brussels that referendums could delay banking union
Michael Noonan, Minister for Finance, with his Portuguese counterpart Vitor Gaspar, at the informal meeting of Ecofin ministers at Dublin Castle yesterday. Photograph: Alan Betson
EU finance ministers agreed in December to create a single supervision mechanism (SSM) for euro zone banks, which would see national supervisors cede some powers to the ECB.
However, some member states, including Germany, had raised concerns about the intermingling of the ECB’s monetary and supervisory functions, arguing that the shift in power necessitated treaty change.
The European Commission, which has been leading the proposals on banking union, has argued that the transfer of supervisory powers to the ECB could be covered under Article 127, paragraph six of the treaty. The commitment by EU finance ministers to “constructively” consider treaty change – which would require a referendum in Ireland – could be seen as a concession to Germany.
There is concern in Brussels that treaty change, which would involve referendums in some member states including Ireland, could delay the implementation of the European banking union, which is seen as a key policy response to the euro zone crisis.
However, EU internal markets commissioner, Michel Barnier said treaty change was not a “precondition” for banking union, “but if there were putative changes to the treaty later on these could be used to strengthen aspects of the banking union later on”.
The opening up of EU treaties could also be perceived as an opportunity for Britain to revisit the EU treaties, something that is favoured by prime minister David Cameron as a way of renegotiating Britain’s relationship with Europe. “A treaty might be simpler, but the question is, Is this the right time to be talking about treaty change?” one European commission official said yesterday ahead of the finance ministers’ meeting.
Banking Union dominated yesterday afternoon’s meeting of EU finance ministers. While the establishment of a single bank supervisor is the first strand of banking union, discussion has now moved to the establishment of a resolution scheme to wind down banks.
Europe wants to shift the burden of future bank bail-outs away from tax-payers and on to private investors, which would included bondholders and large depositors.
Draft European Commission proposals for an EU-wide system to wind down troubled banks, ranks depositors with senior bank holders. However, Joerg Asmussen, ECB governing council member, said yesterday the ECB favours “depositor preference,” when deciding which class of creditor is bailed-in in future bailouts.
The Cypriot bailout was “tailormade” for Cyprus. “What happened there is no way a template or model,” he said. He also stressed the importance of implementing a Europe-wide banking union, in order to give clarity to investors and depositors.
Meanwhile, euro zone finance ministers yesterday agreed to the terms of the €10 billion rescue for Cyprus, which now needs to be ratified by national parliaments.