Today's agreement by the Eurogroup is a historic step forward to a comprehensive banking union in the fullness of time. But the conditionality carefully avoids an easy escape route from the consequences of past bad banking and supervision.
Today's agreement by Eurogroup is a historic step forward to a comprehensive banking union in the fullness of time. But the conditionality carefully avoids an easy escape route from the consequences of past bad banking and supervison. If a State has to ask the taxpayers of the rest of the eurozone for assistance, then its electors should certainly want to question its bankers, supervisors and the political overseers about how it all happened.
Two important thoughts flow from this analysis:
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The European Commission will be deeply involved in every aspect of the resolution process and the MoU on economic policies to such an extent that it would make little sense if it were NOT the actual Resolution Authority. But the period of peak risk is the next 12 months.
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The Agreement is silent on the possibility of opening this support to non-euro area members. That may be the key to encouraging such states to join banking union.
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Eurogroup Communiqué
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