The parliamentary finance-policy spokesman for Chancellor Angela Merkel’s bloc said he’s confident that Germany will persuade more European countries to join it in rejecting a single fund to wind down troubled banks.
Plans unveiled by the European Commission for a banking union in Europe are “not acceptable” in their present form as they’re incompatible with European law, Klaus-Peter Flosbach said in e-mailed comments responding to questions today.
“We advocate a network of national restructuring funds instead of a single European bank resolution fund,” he said. “I’am optimistic that other member states will join our view.”
Flosbach’s comments followed a report in today’s Die Welt newspaper that German Finance Minister Wolfgang Schaeuble is forging a blocking minority of European Union member states against a commission proposal that might hold taxpayers liable for the costs of winding down troubled banks.
Germany has won the support of the U.K., Finland, Estonia and possibly some other EU countries, Die Welt said, citing German government officials it didn’t name. The commission proposal needs the backing of 55 percent of member states representing 65 percent of the 28-nation EU’s population as well as the European Parliament.
Winning allies against the commission is one of three options identified by Schaeuble, which include a legal challenge and delaying progress toward banking union until a new commission takes over next year that’s more open to German objections, accroding to Die Welt.
Germany is not trying to delay the banking union project, a Finance Ministry spokesman said on customary condition of anonymity, declining to comment on the Die Welt article.
“Time and again we’ve made it clear in the negotiations that we need to set a Europe-wide mechanism in motion quickly which allows us to wind down large, internationally active banks,” Flosbach said. “Only then can the new European supervisory standards be fully effective.”
Michel Barnier, the EU’s financial-services chief, unveiled a proposal on July 10 for a single resolution mechanism that gives the commission the power to decide when banks need to be saved or shut, potentially resulting in the use of public funds. National governments can veto any resolution decision that includes possible recourse to the public purse.
In a letter to Barnier dated July 11, Schaeuble said the commission’s proposal “doesn’t match the current legal, political and economic realities and would create major risks.”