Bank supervision was extensively discussed at the EU Council of Ministers of Economy and Finance (ECOFIN) chaired by Cypriot Minister for Finance Vasos Shiarly.
In statements at a press conference after the conclusion of the ECOFIN meeting in Brussels, Shiarly said that bank supervision is a major priority for the Cyprus Presidency.
“As you know, it is a key element in our plans to establish a banking union”, he said, adding that the plan involves the establishment of a single supervisory mechanism – the SSM – under which the European Central Bank and national supervisors will be responsible for overseeing banking institutions.
“The overall aim is to restore confidence in the banking industry. And once the SSM is established, it will be possible for the European Stability Mechanism to contribute directly to bank recapitalisations, rather than doing so via national treasuries as is currently the case”, Shiarly said.
He noted that Ministers have almost reached an agreement apart for a limited number of articles and have mandated the ad hoc working party and COREPER to continue their examinations on the above open issues.
Shiarly also said that an extraordinary ECOFIN meeting will take place on the 12th of December in order to conclude this important issue before the European Council.
Furthermore, the Presidency informed Ministers about the state of negotiations with the European Parliament on bank capital requirements, the so-called CRD 4 package.
The package is aimed at transposing into EU law the Basel 3 agreement approved by the G20 in November 2010. It will form an essential element of the single rulebook and it is important to have it adopted before the single supervisory mechanism enters into force, he said.
According to Shiarly, a number of key issues still have to be resolved.
“Our aim is to reach agreement before the end of this year. Two more political trilogues are scheduled for 11 and 13 December, so we are still on course for that objective”, he pointed out.
Ministers also confirmed a compromise reached with the European Parliament last week on two proposals aimed at improving economic governance in the eurozone, the "two pack", except one issue, namely the review clause in Ferreira report.
“We will ask COREPER to close the open issue thereby confirm the agreement with the Parliament”, he added.
The Minister said that the Presidency informed the Council of an agreement with the Parliament on new draft rules on credit rating agencies.
“This important piece of legislation, which has still to be formally approved by both institutions, sets out to reduce over-reliance on credit ratings, improve transparency and better deal with potential conflicts of interest in the industry”, he underlined.
The Council also took stock of developments on the financial transaction tax, with a view to its introduction in a limited number of member states via enhanced cooperation.
Shiarly said that on the 30 November, the Permanent Representatives Committee decided to send a letter to the European Parliament requesting its consent on a draft decision that would authorise enhanced cooperation.
“The Council will continue work on the text even after the Parliament has given its consent”, he added.
The proposal for an FTT is aimed at enabling a fair tax contribution to be made by the financial industry, which is currently under-taxed in relation to other sectors.
“It’s also aimed at creating a disincentive for transactions that do not enhance the efficiency of financial markets”, Shiarly said.
In addition, the Ministers agreed two important measures under the excessive deficit procedure.
Firstly, on Greece, after the agreement reached last week in the Eurogroup, they adopted a decision granting two extra years for bringing its deficit below 3% of GDP and modifying the adjustment path in terms of the annual targets for doing so.
As regards Malta, because it is confirmed that its government deficit was corrected as from 2011, the Ministers took the formal decision to close Malta’s excessive deficit procedure.
The Ministers also discussed ongoing work on the further development of Economic and Monetary Union and the Commission presented its Annual Growth Survey and its Alert Mechanism Report for the macroeconomic imbalances procedure.
