As US Treasury Secretary Jacob J Lew tours EU capitals to push for tougher banking regulations, European Parliament legislators and officials from Greece, which holds the EU’s rotating presidency, begin talks in Brussels today to create a central agency for saving or shuttering eurozone banks before elections in May.
When EU finance ministers settled on a blueprint in December, European Central Bank president Mario Draghi “strongly” welcomed the plan, though it diverged from the ECB’s position.
The parliament’s stance is closer to the original proposal made in July by Michel Barnier, the EU’s financial services chief.
“With the political clock ticking in Brussels, and with evidence of regulatory fatigue on a number of fronts, it’s all about reaching a position that allows those concerned to claim that plans for a banking union are moving ahead,” said Richard Reid, a research fellow at the University of Dundee.
The Single Resolution Mechanism bill is part of an effort to build a banking union that would sever the financial links between lenders and sovereigns that fuelled Europe’s debt crisis.
Barnier’s proposal for a strong central authority backed by a single fund to cover resolution met with approval from the parliament and the ECB, but faced an initial barrage of German-led complaints from governments, centred on warnings that the blueprint went too far in taking financial decisions out of national hands.
As talks begin, Lew is pressing European officials to follow the US in adopting tougher banking regulations to ensure that American financial firms are not put at a competitive disadvantage.