Europe is creating “banking union lite”, according to the head of the European Parliament’s economic and monetary affairs committee. Sharon Bowles, speaking in Dublin yesterday, said she had doubts about the efficacy of such a weak form of banking union.
Among the reasons for this was the unwillingness of euro zone countries to create a single fund to backstop bank deposit guarantees across the zone.
She said some euro zone governments have refused to sign up to a mutualisation of deposit insurance for fear they would carry the costs of bank failures in other countries.
Although Ms Bowles did not address the issue of Ireland’s efforts to have some of its bank debt shared by other countries, she said “noises from Germany” suggested retrospective recapitalisation of euro zone banks will not happen.
The Liberal Democrat MEP for southeast England told the Institute for International and European Affairs there was a need to make the European Central Bank accountable to national parliaments and courts. This was necessary because while the ECB would take on a greater role in bank supervision, the costs of bank failures would remain largely with national governments.
