Inquiring minds are reading “Towards a Genuine Economic and Monetary Union” by the gang of four nannycrats: European commission president Herman Van Rompuy, ECB president Mario Draghi, José Manuel Barroso of the European commission, and Jean-Claude Juncker, the leader of the 17-country eurogroup.
Don’t expect any details. There aren’t any. Instead the document consists of a wish list wrapped in a wordy package that says virtually nothing.
- An integrated financial framework to ensure financial stability in particular in the euro area and minimise the cost of bank failures to European citizens. Such a framework elevates responsibility for supervision to the European level, and provides for common mechanisms to resolve banks and guarantee customer deposits.
- An integrated budgetary framework to ensure sound fiscal policy making at the national and European levels, encompassing coordination, joint decision-making, greater enforcement and commensurate steps towards common debt issuance. This framework could include also different forms of fiscal solidarity.
- An integrated economic policy framework which has sufficient mechanisms to ensure that national and European policies are in place that promote sustainable growth, employment and competitiveness, and are compatible with the smooth functioning of EMU.
- Ensuring the necessary democratic legitimacy and accountability of decision-making within the EMU, based on the joint exercise of sovereignty for common policies and solidarity.
Details are allegedly coming December 12 2012, with an interim report due in October.
Van Rompuy “expects to reach a common understanding on the way forward for the EMU at our meeting at the end of the week.”
I expect more bickering, if not a major battle because Germany was not included in the preparation of the white paper.
By the way, this pathetic detail-lacking document is all there is to see from the purposely leaked story on June 3, regarding a “Secret Plan for a New Europe”
Germany “Pooh Poohing” Paper Already
The Guardian offers these thoughts on the “plan to save the eurozone”
[The plan] calls for a quick start on establishing a new European banking union, says that the ECB could be given supervisory authority over EU banks quickly, and proposes common resolution funds (for winding up bad banks, funded by a banking levy to spare EU taxpayers) as well as a common deposit guarantee scheme for Europe’s savers.
Berlin is already pooh-poohing the notion, unwilling to “mutualise” liability for other country’s savers or banks any time soon. The paper also says that the eurozone’s new permanent bailout fund, the European Stability Mechanism (ESM), could be used as the “fiscal backstop” for a banking union, opening the way to direct recapitalisation of troubled banks, also opposed by the key power, Germany.
Britain is adamantly opposed to joining a banking union and placing much of Europe’s biggest financial centre, the City, under the authority of the ECB. Arguing that the union should be purely eurozone as a response to the euro crisis, Cameron will demand “safeguards” quarantining the British financial sector while ensuring that any new financial regime does not impair Britian’s interests in the EU’s single market.
The Germans appear reluctant to offer any concessions, though, and the draft says the banking union should extend beyond the eurozone.
Merkel Torpedoes Idea
Please consider these comments from the Guardian Live Blog.
4.13pm: Markets are getting spooked again, and here’s one reason. According to Reuters, German chancellor Angela Merkely has said at a coalition party meeting that Europe will not have shared total liability for debt as long as she lives.
So is this a torpedo aimed at the earlier EU draft talking about turning the eurozone into a fully fledged political union within a decade?
Whether or not this is the case, the Spanish and Italian stock markets don’t like it – they are both down more than 1% now.
4.23pm: But now comes the backtracking.
Seems partial denial over the Merkel comments… allegedly was off the cuff at ‘private meeting’