Commissioner Barnier: Banking Union – and beyond

08 July 2013

"Banking Union marks the starting point of a new ambition for Europe, one that consists of finally building the economic equivalent of monetary union."

Translated from the French

The Banking Union is probably our biggest joint project since the creation of the euro. It proves that we are capable of addressing clearly our shortcomings, such as the lack of a common resolution mechanism for ailing banks. How, then, should the genuine economic and monetary union that we are calling for be constructed so that it can provide the necessary framework for the return of growth and employment in Europe? What new amitions should we have for the Europe of the future?

I. First, we must realise the Banking Union, which will help us handle the main source of funding and the main source of risk for our countries, since our banks finance 75 per cent of the European economy. By creating a "single rulebook", with common rules for the 8,200 European banks, which will create a true single market in this sector and enable better financing of business projects as well as reduce existing differences between Member States.

By submitting the banks of the euro area to a single banking supervision, under the authority of the ECB, we will strengthen the credibility of the European banking sector and fight against the fragmentation of the euro area. We will also improve the ability of our banks to finance the economy. We also need to adopt the missing components - especially the single resolution mechanism - in order to ensure that the Banking Union will (progressively) develop clout and impact.

II. Secondly, in addition to the Banking Union, we must further economic and fiscal integration. This has, in my view three priorities:

• We must ensure the effective implementation of the new rules of governance for the euro area. It is clear that if we want an economic government of the eurozone, then we must accept that the Commission may make policy recommendations.
• Tax and social integration - the single market should be able to rely on VAT rules that are finally clarified and harmonised. We must put an end to the pointless and outright dangerous tax competition within the EU.
  Besides this tax integration, I am convinced that the economic and monetary union cannot exist without a real social base.
• The third priority is economic and fiscal integration for joint projects in the industrial sector.

III. Finally a word on the method needed to kick off this new phase of European integration:

• We need to involve the European citizens themselves to a greater extent. If we want to change Europe, reaching every citizen, every business, every local authority is crucial. We also need to involve the regions, trade unions and civil society, to strengthen the link between citizens and the European institutions. In the longer term, we will even need a president of the European Union, which will combine the functions of president of the European Council and the president of the Commission, and will one day be elected directly by the citizens.
• We need to simplify Europe and do not forget the principle of subsidiarity.
• We need to stick to the community method.
• We must be pragmatic about legal matters at this new stage of integration. I'm not closed to the idea of a new treaty, which some Member States are calling for. That said, we should not put all our energy into a possible review of the treaty, especially since much can be done already now without changing it. We have the scope for action within the existing legal basis and should also not hesitate to make use of enhanced cooperation.

Full press release (in French)

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