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29 July 2015

Deepening EMU – Round-up of Key Events – July 2015

Greece avoided bankrupcy thanks to a last-minute deal on 13th July that came after a still resounding ‘No’ to the latest creditor’s proposals on a referendum held by the Greek government. The roadmap to a complete EMU kicked off on 1st July, and François Hollande called for a 'eurozone government'.


Greece was again extremely topical, with a breathtaking last-minute deal to avoid bankrupcy on 13th July that came after a still resounding ‘No’ to the latest creditor’s proposals on a referendum held a week before by the Greek government. As Graham Bishop stressed, it was a “problem of social culture, not just finance, economics and politics”, that led 3.6 million Greek voters to claim they should be entitled to debt relief from the rest of the eurozone. Greek Finance Minister Varoufakis resigned the day after the referendum, but his successor didn’t even bother to bring a new ‘Trojan horse’ to Europe, in the form of a new economic proposal.

Intense negotiations took place until an agreement was reached after a 17 hours-long meeting between Alexis Tsipras’s economic work team and the European institutions’ leaders: Council President Juncker was relieved to confirm that “there would be no Grexit”. Eurogroup President Dijsselbloem reported about the ongoing process for achieving a new ESM programme for Greece. But the threat of a “temporary exit” from the euro for Greece from a German coalition had shaken the foundation of the euro in such a fundamental way, that the Greek deal could actually destroy the euro, according to The New York Times.


The Roadmap to a Complete Economic and Monetary Union (EMU) started on the 1st July, and the College of Commissioners had a first debate on the "Five Presidents' Report" to mark Stage 1.

European leaders debate between looser or deeper integration, and the muddled response to the Greek crisis has shown the flaws of an ‘insufficient’ Europe, in the French President’s words: Hollande called for a 'eurozone government' to further integrate member states, with a “government, a dedicated budget and a parliament to ensure democratic control.” Italian Finance Minister Padoan backed this suggestion, calling for a ‘political union’ to save the euro.

On Brexit, Iain Begg wondered “could it be ‘Brexpulsion’ rather than ‘Brexit’?”, mentioning the possibility that in the longer term the UK might be faced with the challenge of expulsion from the European Union, in a form of “constructive dismissal.”


The Commission agreed a package of measures which will make sure that the EFSI takes off in autumn, such as communication on the role of National Promotional Banks (NPBs) in supporting the Investment Plan for Europe.  As for the European Council, the 2015 'European Semester' was concluded after the Council endorsed itsrecommendations to member states on economic and fiscal policies.



The European Commission launched a consultation on the possible impact of the CRR and CRD IV on bank financing of the economy: Commissioner Hill said it was the “time to ask whether the rules [that had restored resilience, stability and trust in the European banks] have unintended consequences”.

The Euro Retail Payments Board’s (ERPB) meeting provided productive outcomes in the field of new technologies applied to payments. The BIS’ Caruana complimented the CPMI on a fundamental accomplishment as part of the Basel Process; the Committee and PFMI Principles assessment.



Capital Markets Union was in every European regulator and banker’s minds: Graham Bishop wrote that ESMA’s mantra on this topic is that "a high level of investor protection is essential for a successful CMU. Only when investors feel sufficiently protected will they be willing to enter financial markets", and that some of the CMU’s building blocks, such as the MiFID II/MIFIR were precisely the focus in the MiFID II/MIFIR was also published.



The European Council confirmed an agreement with the Parliament on insurance distribution while the Commission reached a deal to improve consumer protection for insurance products.

Full article for consultancy clients


© Graham Bishop

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