“This is a good week for the European Union, a week to be remembered,” said a probably very tired Herman Van Rompuy, President of the European Council, at 2 am Friday morning, after a night of discussions. “Monday we were in Oslo. This morning the finance ministers agreed on the Single Supervisory Mechanism for banks and a decision was taken on Greece in the Eurogroup.”
The discussions Thursday night focused on two things:
1) A strengthening of the banking system.
2) Bringing closer the European economic policies.
For the strengthening of the banking system the European finance ministers came a long way Thursday morning, when they agreed on a plan to give supervising power to the European Central Bank in Frankfurt.
Initially the Single Supervisory Mechanism was supposed to embrace the more than 6000 banks in Europe. However a compromise was made, not at least in favour of Germany, and finally the ECB will only have responsibility of the banks with assets of more than €30 billion, or banks representing more than 20 percent of a state’s national output.
This covers between 150 and 200 banks, but leaves most of Germany’s retail banking sector under the responsibility of the German national authorities, according to Financial Times.
The second point, the integration of the European economic policies, implies coordination of national reforms, advancement of the social dimension of the EMU, solidarity mechanisms and measures to protect the integrity of the Single Market. This has however been delayed and Mr. Herman Van Rompuy will present a time-bound road map along with possible measures to the European Council in June 2013.
French President, Francois Hollande, expressed somewhat satisfaction with the summit at the final press briefing: “The period where Europe asked itself about it’s future, it’s destiny and where it asked itself if it could stay in the present composition of the EU, is now over. The banking union might seem to be an extremely technical program. And it is; supervision, regulating mechanisms, recapitalization of the banks. But this is a construction of supervision and intervention that will make sure, that savings will no longer go into the hands of the banks. This, I think, will turn out as a great relief for many Europeans.”
The President of the European Council equally positive concludes that “the worst of the eurozone crisis is behind us, but much still needs to be done. All the hard work is starting to pay off.”
German chancellor Angela Merkel was asked at the final press briefing if she shares the optimism expressed by her colleagues: “I think it has become obvious that there is a determination to strengthen the euro. This can be seen in the way we dealt with Greece, we showed we are willing to pursue this through reforms. Such a process is a very difficult process. This is not something you can deal with over night, the effects of this takes time, there will be fairly modest growth rates, in some countries even negative growth rates, so the burden of the crisis will be felt for a long time,” said Angela Merkel and thereafter warmly wishing everyone a happy new year.