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In light of the current negotiations on the banking union and the planned regulation to set up a European Supervisory Authority, the EESC supports the Commission's initiative, as set out in its opinion adopted at the plenary session on 15 November. It also emphasises the need to adopt a practical roadmap that can start having effect as quickly as possible.
In another opinion moreover, the EESC has highlighted the need for proper regulation of the shadow banking system, so that its business is conducted in keeping with the requirements applied to the rest of the sector.
Roadmap towards a Banking Union
The opinion on the Banking Union Package is a response to the consultations carried out by the European Commission, the Council and the European Parliament on the Roadmap to a Banking Union and the Regulation establishing a European Supervisory Authority. The opinion's core message is to support a banking union that can give the banking sector a solid foundation and restore confidence in the euro as part of a long-term project for economic and fiscal integration. The purpose is not only to introduce supervision by EU bodies, but to back this up with further measures, such a deposit protection system and a common resolution framework for ailing banks, together with integrated banking crisis management.
"The banking union provides a triple response to the financial crisis, creating confidence by stabilising Monetary Union, countering fragmentation, and shielding the sector from future imbalances. At the Committee, we are convinced that the Banking Package is a step forward for the EU, and that it can trigger a new cycle restoring competiveness to the single market", argues Carlos Trias Pintó (Various Interests Group), rapporteur-general for the opinion. The current crisis demonstrates that the model of fragmentation and national regulation is ineffective, which is why the EESC urges that powers be handed over in order to bring about uniform and fully reliable supervision. This is the way to achieve effective European governance that is socially useful and economically efficient.
All this requires rapid agreement in order to bring a Single Supervisory Mechanism into operation, with the ECB in charge of supervising all the Union's banks. The EESC stresses that within the ECB, the European Systemic Risk Board and the new financial supervision authorities must engage with civil society organisations, especially consumer associations and the trade unions.
Shadow banking
A banking union and other models for investment and commercial banking could be seriously undermined by what is known as shadow banking. "Shadow activities have increased in recent years as a result of deregulation, and ended up contributing to the property bubble and subsequent financial collapse. Even if shadow banking was and is not subject to the same regulatory and prudential requirements as regular banking, public bodies have ultimately had to deal with the losses caused by its financial activities", said Juan Mendoza Castro (Workers Group, Spain), rapporteur for the EESC opinion on shadow banking.
The EESC wants to remove the distinction between "shadow" and traditional banking activities: the shadow banking system should be subject to the same regulatory and prudential requirements as the financial system as a whole. In particular, future EU legislation on shadow banking must protect European consumers by making products on offer transparent and ensure that all financial activities contribute to the real economy and to economic growth.