19 May 2013

Commissioner Barnier: Resolution mechanism for banking union can be created without treaty change

Barnier believes that the crucial building blocks of the eurozone’s banking union can be created within the limits of the existing EU treaty, which puts him in disagreement with the German Finance Minister Wolfgang Schäuble. The new framework will provide for the possibility to use resolution funds, and eventually public means, but only after all other options, including bailing in uninsured depositors have been exhausted, says the Commissioner. Nonetheless, Barnier believes that wiping out deposits over €100,000, as happened in Cyprus, will be an extreme case scenario.

"When the system is fully in place, with common supervision, better-funded deposit guarantee schemes in every country and common resolution for the eurozone banks, we will have a full banking union. Our aim is to avoid the need for public financing for banks in the future. The objective will be to avoid using public money, but there may be of course be cases, in which we will have to do so. In these cases, when all other options have been exhausted, either the state, in which the bank is based, will have to intervene directly, or the European Stability Mechanism. But I believe that’s should happen only after shareholders, and all other creditors and uninsured depositors have been bailed in. It hasn’t been agreed officially yet, but there is a broad consensus on that. And this is logical.

"In the last three years, European heads of state and governments have taken the right decisions, for regulation, for economic governance, for budget surveillance. At national level, there have been courageous decisions, which have been taken in Cyprus and Greece. As a politician, I am well aware of the efforts, which have been required from both the Cypriots and the Greeks. These efforts have been tremendous. And I don’t underestimate how tough and difficult these decisions have been and how much people are suffering.

"In the Commission, I have been pushing for a long time to get the balance between austerity and growth right and that the actions that we take are necessary to rebalance the budget, but don’t destroy and rather encourage growth. But overall, the right decisions have been taken in difficult circumstances, bearing in mind many of the problems accumulated in Cyprus and Greece over many years. Both PM Samaras and President Anastasiadis are courageous men who have taken the difficult decision not to sacrifice the future, due to the political cost of the present. I am confident that both Cyprus and Greece will manage to come out of the crisis. These two countries are not alone. We show our solidarity and they have many assets to exploit."

Full interview

© Kathimerini