EU wants to keep an eye on banks

The first day of the EU summit in Brussels passed without surprises for its participants.

As expected, the leaders of t

he 27 EU countries approved the decision to create the European Banking Union, which was adopted by European finance ministers after a lengthy debate just one day before the euro summit.

The new structure will oversee European banks and help create institutions that insure banking risks.

However, not all of the euro area’s 6200 banking institutions will be under full control, but only about 150 of the largest of them.

The first day of the EU summit in Brussels passed without surprises for its participants.
As expected, the leaders of the 27 EU countries took a decision to create a European Banking Union, which was adopted by European finance ministers after a long debate literally one day before the euro summit.

The new structure will oversee European banks and help create institutions that insure banking risks.

True, not all of the eurozone’s 6200 banking institutions will be controlled, but only about 150 of the largest of them.

Advertisement
A single supervisory mechanism, run by the European Central Bank, is scheduled to be launched in March 2014.

Speaking to reporters, EU President Herman Van Rompuy said, “The aim of the banking union is to break the vicious circle between banks’ problems and taxpayers’ money, which until recently states have used to solve these problems.”

The creation of the Banking Union is one of the key moments in the formation and further strengthening of the Economic and Monetary Union, which aims to improve the governance of economic and financial policies in the Eurozone by reducing the powers of national governments.

The second stage of the recovery of the European economy is the creation of a system of direct recapitalization of banks. That is, Europeans urgently need an effective mechanism that will allow partial or full bankruptcy of troubled financial institutions without creating an acute crisis situation for the entire European economy.

Summit participants confirmed the intention to establish a single fund for the recapitalization of troubled banks in the European Union, to be financed by the financial sector itself.

Concrete proposals for a unified system to support troubled banks in the EU will be ready by June next year. Once adopted by European leaders, they will form the basis for the functioning of the EU banking union.

You may also like