The Economic and Financial Council, which convened on Tuesday in Brussels, adjusted the mandate of the Greek Presidency for negotiations with the European Parliament on the establishment of a single resolution board and a single fund for the resolution of the banks, following serious disagreements between the EU Finance Ministers, over the establishment of the banking union.
President of the ECOFIN and Greek Finance Minister Ioannis Stournaras and the President of the Eurogroup Jeroen Dijsselbloem are traveling to Strasburg on Wednesday to meet with members of the European Parliament in an attempt to overcome the deadlock.
Stournaras acknowledged that the EU Finance Ministers do not agree on all the compromising proposals of the Greek Presidency and said the discussions held the last two days were tough.
The two main problems hindering the conclusion of an agreement between the Council and the Parliament relate to the second pillar of the banking union, which is the SRM.
In particular everyone agrees that the Fund’s resources should reach 55 bn euro in a decade through the annual contributions of the banks, with the largest ones contributing 40% of the total amount. However, the European Parliament wants the Fund to be operational from day one, but Germany insists on the ten year transition period, which means that the smaller countries will not have enough resources in the Fund to address a potential problem.
As time is running out, the ECOFIN called for a conclusion of the talks on the proposed single resolution mechanism (SRM) in time for the Parliament`s plenary session on 14 to 17 April, so as to enable the regulation to be adopted before the end of the Parliament`s current legislature.
The mandate given to the Greek Presidency is based on a series of alternative scenarios presented to the Ministers.
In December, the Council agreed on a general approach involving both a draft regulation on the SRM and a commitment to negotiate, by 1 March, an intergovernmental agreement on the functioning of the single resolution fund (SRF).
Under the Council`s general approach, the SRM would enter into force on 1 January 2015, whereas functions relating to the bail-in of shareholders and creditors and concerning resolution would apply from 1 January 2016. The SRM is intended to cover all member states participating in the Single Supervisory Mechanism, namely the euro-area countries and those non-eurozone countries that decide to join.
