THE WEEK THAT WAS... (November 11, 2013)

It is all about the future of the European banking union. The European Central Bank of Mario Draghi wants that a bank bailout authority should be centralised and cover all Eurozone banks; the agency called ‘single resolution mechanism’ should be ‘strong and independent’ with clear unitary powers to force failing banks to recapitalise or shut down.

This stance puts ECB President Draghi in direct conflict with the German Government of Angela Merkel. Wolfgang Schäuble, Germany’s finance minister only wants the 130 biggest banks and not all banks be subject to the system and that the mechanism should start as a ‘network’ of national authorities because the European treaties do not allow a single decision taker for all countries. Draghi’s reaction was that ‘a single mechanism is better placed to guarantee optimal resolution work than a network of national resolution authorities’. He disagreed with Schauble about necessarily treaty changes. In the opinion of Draghi there is no need for such changes; provisions in current treaties are adequate, he said. The ECB is siding with the European Commission which already in July proposed a single authority.

Hard against hard! The EU summit in December has to take a decision on the subject, otherwise there will be a delay of at least one year while the European Parliament is dissolved and a new EU leadership has to be chosen after the parliament elections and the following battle for the European Commission Presidency.

The European banking union is considered as the biggest shift in sovereignty for the eurozone since the introduction of the Euro… A thrilling story, not about peanuts.