After many, many sleepless nights and talks of consensus – the EU may just be about to nail an accord on who would really “control” the banks.
Yet on it’s path is the most powerful member of the group – Germany.
Arguments are good, really. But if arguments take so long while there is still no clear sign of recovery, only the people would suffer more. See? How’s inflation? Employment? Manufacturing? Exports?
Germany may be better off compared to other members of the European Union – but it’s still a member, so learn to consider. Or would Germany just rather break-up the bloc and start anew?
Well then, what is Germany’s contention?
That if the EU would have sole authority on closing banks within the euro zone – it would breach EU treaties. For such authority could force national governments to rescue failing banks, and this could lead to more troubles like legal and market uncertainty that is.
On the other hand, as noted by the WSJ, EU finance ministers agreed last month on a plan to force bank creditors and large depositors to take losses in case of bank failures – rather than have the banks bailed out by national governments.
Okay, obviously, Germany doesn’t want to cough out “hard-earned” money for the miscalculations of others – understandable. And that it wants their national governments to be the first ones in handling their own banks’ struggles. Not bad.
But, tell you what, with the upcoming EU proposal – it’s the entities like the large depositors who would be ranting. Hey, we helped and entrusted you our monies then we are to pay for your failings? We’d rather give it to charity or the suffering citizens themselves rather than to mismanaged banks.
With this said, we see that the EU’s finance ministers are only trying to reach an agreement – unfortunately, with the expense of their citizens, again. Would we see of an exodus of deposits and citizenship changes anew?
One solution – the EU should not just look to determine the banks who’re in trouble but monitor the banks’ activities. Whew! That’s a lot of work but somebody has to do it. How about setting up EU financial control centers in every member country to help out?
As it is, the EU would just be going circles.. and banks would still remain risky.
What’s your take?