Update on Banking Union Post author By Philip Lane Post date June 14, 2013 Interesting WSJ article on the current negotations here. Asmussen speech here. Categories In Uncategorized 3 Comments on Update on Banking Union ← Latvia and the Euro: A Bet with No Upside → Lessons from the 1950s? 3 replies on “Update on Banking Union” From the speech by Asmussen; “Finally, let me say a word on direct bank recapitalisation by the ESM. There are various misconceptions about this instrument, such as that it opens up the possibility for debt mutualisation through the backdoor. That is absolutely not the case. Recapitalisation through the ESM will come only after, first, shareholders and creditors have been written down, and second, the beneficiary Member State has absorbed all incurred and expected losses based on a rigorous economic evaluation. So the prospect of losses for the ESM is limited.” Not much joy there (apart from the evident inadequacy of the overall amount of funding)! Steinbrueck in his usual blunt manner (which probably makes him un-electable), is quoted as saying Merkel will “do everything to prevent triggering bank recapitalisations as it would be not so popular here”. http://www.irishtimes.com/news/world/europe/merkel-challenger-warns-ireland-on-legal-tax-evasion-and-solidarity-1.1428035 Of course, he might be back as Merkel’s finance minister! Still, steady if erratic progress on Banking Union. This is what banking union looks like in a small Eurozone country….. http://cyprus-mail.com/playing-pr-games-with-the-troika-could-backfire/ “Contrary to Anastasiades, the economist believes capital controls have to remain in place for all banks “for at least a year”, as they were for many decades before Cyprus joined the eurozone. “People shouldn’t be terrified about it. And the Europeans have to understand they put us in this mess, they’ll have to put up with it.” However, according to a source, the government’s aim in writing the letter was to remind the troika, mainly the ECB, that the decision not to bailout two systemic banks of a eurozone country was their idea. The least they could do is give that country’s banking system, and by extension economy, a fighting chance of survival.” On the role of governments, as identified by Asmussen, this lengthy article in Le Figaro Magazine underlines the extent of the hill to be climbed in France. http://www.lefigaro.fr/politique/2013/06/14/01002-20130614ARTFIG00613-ces-lobbies-qui-bloquent-la-france.php One startling statistics is that half a million “jobs” have been added in the sector of local government (while the same number of manufacturing jobs have disappeared over the past number of years). A radical change in direction is clearly called for. How is the question! Jacques Attali remarks in the course of an interview; «Aussi loin que l’on remonte, la France ne se réforme jamais, mais fait parfois la révolution». Comments are closed.