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Commission wants to give ECB control over all eurozone banks; Schäuble: It is “common sense” to limit supervisory powers to systemically important banks

31 Aug 2012

The Commission’s latest proposals for a banking union, which it will present on the 12 September, would see the ECB being given supervisory powers over all 6,000 eurozone banks, stripping national bodies of any real power, claims the FT. The power would lie within a new 23 man supervisory board within the ECB, made up of a representative from each eurozone state and six independent members. The supervisory function would start from January 2014, although, for banks which borrow from the eurozone bailout fund, supervision could start as early as January 2013.

Writing in the FT, German Finance Minister Wolfgang Schäuble argues that it is “common sense” to only monitor systemically important banks rather than all 6,000 eurozone lenders. The presence of a “Chinese wall” between supervisory and monetary policy matters “would also make it easier for EU members that do not use the euro to participate in the supervisory system, thereby protecting the coherence of the single market,” he writes.Writing in the Guardian, Commission President José Manuel Barroso argues, “We will need to bridge the gap between eurozone members and EU members that remain outside the monetary union, some of which may want to participate in the new supervisory mechanisms.”

Schäuble also called for a cap on bank bonuses to be included in a compromise between MEPs and national governments to implement Basel III under the EU’s Capital Requirements Directive. “Immediate cash bonuses for top bank executives should not exceed their fixed pay,” he argues.
FT CityAM Euractiv Expansión Süddeutsche: Barnier EUobserver Guardian: Barroso WSJ Telegraph Echos Süddeutsche FT Süddeutsche 2 FAZ: Ruhkamp FT: Schäuble FT Reuters

Open Europe's Pieter Cleppe was interviewed for the BBC Radio 4 documentary "The F-word: a History of Federalism", arguing that “fiscal transfers” constitute no fundamental solution to the eurozone’s current problems.
BBC The F-word

On his Telegraph blog, Open Europe Director Mats Persson notes that it’s far from clear that Spanish depositors would panic in case of a managed Greek euro exit – as some commentators believe – but that “Spanish deposits could well be a key barometer of the next stage of the eurozone crisis.”
Telegraph blogs: Persson

EU ministers agree to budget summit in November
EU ministers meeting yesterday in Cyprus to discuss the EU’s 2014 – 2020 framework budget broke up agreeing to convene a special summit in November to continue discussions. Member states were divided on issues such as the need to reduce the Commission’s proposed budget – with net contributors such as the UK and Germany are calling for a reduction of around €100bn - potential new EU taxes, and funding levels for the Common Agricultural Policy and the structural funds. FTD quotes EU Budget Commissioner Janusz Lewandowski as saying "so much money today flows into the structural funds to the South and it doesn't help to improve our competitiveness".
FT FTD AFP European Voice Euractiv EUobserver Cyprus Mail Wprost Open Europe research: EU budget reform

Andalusia could be next Spanish region to request a bailout
The Spanish government will today adopt a new package of financial sector reforms – including new rules on winding-up ailing banks and the creation of a ‘bad bank’ to house the toxic real estate assets currently held by Spanish banks. Meanwhile, the Governor of Comunidad Valenciana, Alberto Fabra, said yesterday that his region will ask the Spanish government for a bailout loan of over €4.5bn – higher than the previously suggested €3.5bn. Andalusia’s Deputy Governor, Diego Valderas, suggested yesterday that his region could also need to seek a bailout from the Spanish government, but added that the bailout request should not affect Andalusia’s “sovereignty and autonomy.”
El País El País 2 El País 3 El País 4 El País 5 Economist Expansión El Economista Bloomberg

Spain and France renew calls for ECB intervention;
Bild: Weidmann has considered resigning
Following their meeting yesterday Spanish Prime Minister Mariano Rajoy and French President Francois Hollande backed calls for greater ECB intervention in the crisis, with Hollande saying, “When you see such wide gaps in yields, that could be a justification for an intervention in the name of monetary policy.” Meanwhile, Bild reports that, according to unnamed sources, Bundesbank President Jens Weidmann has considered resigning in recent weeks. According to El Mundo, German Chancellor Angela Merkel is urging Spain and Italy to delay potential requests for EFSF bond-buying, as she would like the Bundesbank’s internal tensions to ease first.
WSJ CityAM European Voice Le Figaro Economist: Charlemagne Bild MNI Handelsblatt El Economista Corriere della Sera El Mundo

A new Forsa poll for the German Council on Foreign Relations’ house magazine IP has found that 33% of Germans want the EU to revert to its days as a purely economic community, 25% favour the status quo, 20% favour further integration while 15% want the EU to be abolished altogether, up from 10% in 2009.
DGAP: IP Der Westen

Slovakian Prime Minister Robert Fico has told reporters in Bratislava that “I see a 50% possibility of the eurozone splitting and a 50% chance of its survival”.
Deutsche Welle

Sources quoted by Kathimerini reveal that the Greek government is planning to raise €4.5bn of the €11.5bn austerity package demanded by the EU-IMF-ECB Troika for 2013-14 through pension cuts. Separately, Greek Finance Minister Yannis Stournaras will meet his German counterpart Wolfgang Schäuble in Berlin on Tuesday.
Kathimerini Kathimerini 2 Kathimerini 3 Expansión FT

The Estonian parliament yesterday ratified the ESM Treaty establishing the eurozone’s permanent bailout fund, with 59 out of 101 MPs voting in favour.

According to new figures released by Eurostat today, unemployment in the eurozone in July maintained its record high of 18 million – 11.3%.
Eurostat press release

The FT reports that German Chancellor Angela Merkel’s reluctance to support EU trade cases against China may put her on a collision course with EU Trade Commissioner Karel De Gucht.
FT CityAM WSJ Telegraph: Evans-Pritchard

The Times notes that ONS figures showed that the non UK-born population rose from 5.2 million in 2004 to 7.5 million in 2011, following the expansion of the EU to include former Soviet bloc states. The estimated UK population born in the eight states, including Poland and the Czech Republic, rose from 167,000 to 689,000 between 2004 and 2008.
Times Open Europe research: Free Movement

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