The EU approves a minimum agreement for the banking union and parks the guarantee of deposits and unemployment insurance
Twelve months and a little step. EU leaders approved on Friday the minimum agreement reached ten days ago in an 18-hour marathon Eurogroup: a emergency fund to tackle banking crises and to strengthen the powers of the European rescue fund. Outside of the agreement, as already anticipated the meeting of ministers of Economy of the euro, there remain the European unemployment insurance and the guarantee fund for the bank deposits of the account holders.
"The Hanseatic League [países nórdicos y Holanda] They are more Taliban than the Taliban, "says a diplomatic source:" They do not want to hear about this type of proposal, and at the summit of the euro, things have to be approved by consensus ".
The most tangible element of the reform is the creation of a safety net, backstop, for the Banking Union. It is a mechanism announced in 2013, already agreed upon, but about which details are missing and the date of its introduction - planned for 2024 but susceptible to being advanced.
It will be an emergency solution for situations in which the resources of the Single Resolution Fund (FUR) are not enough to face a bank failure. It must intervene as a last resort to finance the European interventions of banks in bankruptcy and avoid the public rescue.
"Important decisions have been taken to strengthen the single currency," said the president of the Government, Pedro Sánchez: "We are not satisfied, it is insufficient, we have agreed to start the banking support, a reform has also been approved of the ESM [Mecanismo Europeo de Estabilidad] for cases of financial crisis; and we have discussed the fiscal pillar, where the mandate for the implementation of a common budget for the euro zone has been approved. "
"This government has defended more ambitious proposals, such as a common unemployment insurance that we are convinced is necessary for periods of crisis," said Sánchez, who has acknowledged that they are "insufficient steps in the euro zone."
The Heads of Government of the EU, in addition, have agreed to strengthen the powers of the European rescue fund, the European Stability Mechanism (ESM). The reinforcement is for economic supervision and the design and surveillance of rescues, tasks that will be shared with the European Commission. The euro countries with difficulties, in addition, may have access to a preventive line of aid before a possible rescue, which will be subject to an "appropriate level of conditionality".
The president of the Eurogroup, the Portuguese Mario Centeno, explained that there have been "steps" in the discussion of a budget for the euro area, although the division prevents further progress in this line: "In just a few weeks we went from the impossible to the probable in terms of a budget for the euro area, today I hope to receive a mandate from the leaders to continue working on the budgetary instruments and promote convergence and competitiveness in the euro area. " But not stability: "We had a very intense year working in many areas, we went through very complex discussions about the budget and we asked for a mandate."
Nor have they managed to close a plan to initiate the political debates on the single deposit guarantee fund (EDIS), the third pillar of the Banking Union. "We fought to make him more visible," Sánchez said, "he appears surreptitiously and we hope that at the next summits we can see EDIS with all his letters."
They also agreed to increase the effectiveness of the precautionary credit lines that may be requested by states in difficulties, but that do not need a ransom; and agreed to launch a process to "promote the sustainability of public debt", through the introduction of collective action clauses with simple aggregation clauses (CAC in financial jargon) in sovereign bond issuances as of 2022. In practice, they make it easier for creditors to take losses in case of restructuring.
20181214 Euro Summit Statement
