Greece: Unsurprisingly, the Greek crisis was a major focus of attention! We were treated to an eloquent, Greek exposition of the basic `market economy’ reforms that Greek governments have promised for the last five years – and failed to implement. The results have tested the economic 

governance system of the euro area as never before…. But it was Greece 2010 that created it in the first place and Greece 2015 is likely to force a further revision. The EMU edifice was built on the 

foundation stone of sound public finance – epitomised by the key entry requirement of a budget 

deficit below 3% of GDP, and a small surplus in normal times. If states compiled and reported their 

data accurately and then kept this simple rule, debt ratios would fall over time and states would 

have pooled minimal sovereignty. 

 

I recommend you to watch the sparring match between former Belgian PM Verhofstadt and Tsipras 

at the European Parliament: Parliament at its best - holding Greece to public account! Verhofstadt 

speech.

 

One of the `prior conditions’ for Greece to get  its funds is to transpose the Bank Recovery and 

Resolution Directive (BRRD) and that will have the unmistakeable effect of putting “Europe” in total 

control of the future of the Greek banks – as if the hand on the flow of liquidity were not enough. 

EBA has just published a series of Standards about how BRRD will be put into practice for any bank - if the need arises. 

 

Economic governance in euro area

 

Conclusion of Fifth European Semester at June European Council:  a process created to respond to 

the Greece 2010 crisis.  Ironically, the Fifth European Semester concluded at the same European 

Council meeting in June that had to deal with the next iteration of the Greek crisis.  The same 

Council meeting should have devoted much attention to the “Five President’s Report” on 

Completing Europe’s Economic and Monetary Union. It seems to have been nodded through yet it 

proposes far-reaching changes in governance over the next decade. In a fifteen-year span, Greece 

may turn out to have triggered a profound revolution in Europe’s political structure. But there are 

also powerful implications for Britain over the decade of this plan as the UK risks marginalisation as the euro area drives towards deeper integration.

 

Target 2 should be a major building block for Capital Markets Union and went live last month --- 

after a seven year gestation. However, we were given the surprising news that even after the recent CSD Directive (and the Payments Finality Directive many years ago) a Lehman-style crash could still open up the age-old question of who is the genuine owner of the security held in T2S.This needs a `Securities Law’ and there is a suspicion that Commissioner Hill has already quietly abandoned such an intensely difficult topic.

 

“29th Regime”: is the private sector effectively creating some key components of CMU via this supra-national regime where governments fail to act? IFRS celebrate their 10th anniversary as private sector standards that have been turned into EU law. Will the Covered Bond Label (CLBF) achieve a similar result – but possibly globally with a common harmonised transparency template across jurisdictions? Will the eleven Industry associations from around the world who endorsed ISDA data reporting principles do the same?