Friday, 14th December 2012
European Banking Union: Key issues and challenges
Source: House of Lords European Union Committee (UK)
A European banking union is urgently required in order to restore credibility and stability to the euro area banking system, and to break the vicious cycle between banks and sovereign states. The UK has made clear that it will not participate in a banking union, although other non-euro Member States may well wish to do so. Nevertheless the consequences for this country could be momentous. There is a significant risk that the UK will be marginalised as banking union participants move towards closer integration. This in turn threatens to fracture the single market, as the authority of EU-27 bodies such as the European Banking Authority and the European Systemic Risk Board comes under threat. The Government’s assurances about the impact on the City of London may prove misplaced. The Government must do all in their power to ensure that London’s pre-eminence as a financial market is not imperilled and that the integrity of the single market is retained. UK isolation in debates of such fundamental importance would be disastrous.
The original banking union proposals set out a three-pronged approach: a Single Supervisory Mechanism, a common resolution mechanism and a common deposit insurance scheme. We regret that this coherent model has already been undermined by political pressure, led by Germany. Banking union requires all three of these elements if it is to be effective.
However we welcome the publication of the Single Supervisory Mechanism proposals as a significant first step towards banking union. We agree that the European Central Bank, to be given ultimate supervisory responsibility for every euro area bank, is the only organisation with the necessary credibility and authority to take on this role. But the concentration of so much power in one institution means that powerful safeguards must be put in place.
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Having begun his career in academic libraries, Adrian Janes has subsequently worked extensively in public libraries, chiefly in enquiry work as an Information Services librarian. In this role he has had particular responsibility for information from both the UK Government and the European Union. He wrote a detailed report on sources for the latter which was published by FreePint in 2007, and has contributed articles to FreePint and ResourceShelf. He is involved in training in information literacy and the use of online reference resources.
A Contributing Editor to DocuTicker, he also write reviews for Pennyblackmusic.
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