Connect with us

World

Explained: Why the EU’s banking union is still unfinished business

Published

on

Explained: Why the EU’s banking union is still unfinished business

Monetary markets can not seem to shake off the jitters sparked by the spectacular collapse of Silicon Valley Financial institution (SVB), the most important American financial institution to fall since 2008, and the government-brokered takeover of Credit score Suisse, Switzerland’s second-largest lender.

Regardless of repeated assurances from policymakers, shares of European banks proceed to be hit by the continued turmoil, with shares taking place once more after having seemingly recovered.

Deutsche Financial institution, Commerzbank, Société Générale and BNP Paribas are amongst those that have seen their worth take a plunge in latest days, including to the state of basic disquiet.

Inevitably, the most recent information has make clear an uncomfortable query that has for years beset the eurozone: Why is the banking union nonetheless unfinished enterprise?

The banking union dates again to 2012, a time when the eurozone was going via a devastating debt disaster that challenged the survival of the one forex itself.

Advertisement

“We affirm that it’s crucial to interrupt the vicious circle between banks and sovereigns,” EU leaders stated in a joint assertion signed on 29 June 2012.

Eurozone banks have been thought-about to have excessively shut hyperlinks with their house nations as a result of they have been principally shopping for bonds from their very own governments, reasonably than diversifying throughout the bloc.

This concentrated publicity to sovereign debt was compounded by the truth that retail deposits have been protected initially by home laws.

This co-dependence meant that as quickly as banks have been in misery, the issues might simply spill over into the nationwide authorities – and vice-versa.

The banking union was designed to weaken this bank-sovereign connection and inject a recent European dimension by harmonising guidelines, decreasing fragmentation and making certain taxpayers’ cash was not additional used to rescue failing banks.

Advertisement

The political impetus led to the undertaking’s first two pillars – the Single Supervisory Mechanism (SSM) and the Single Decision Mechanism (SRM) – to be agreed upon comparatively quick. 

The SSM granted the European Central Financial institution stronger powers to observe the well being of eurozone banks, whereas the SRM arrange a typical fund – paid by banks themselves – to deal with bancrupt establishments.

However the brand-new construction was left limping, because the third and final pillar remained conspicuously lacking: the European Deposit Insurance coverage Scheme.

A persistent stalemate

Underneath present EU guidelines, deposits of as much as €100,000 are protected in case of a financial institution failure.

This safety, nevertheless, is supplied at a strictly nationwide stage, reinforcing the bank-sovereign cycle.

Advertisement

In 2015, the European Fee proposed the creation of the European Deposit Insurance coverage Scheme (EDIS) with a purpose to assure all deposits throughout the eurozone loved an equal stage of safety, whatever the financial institution’s location and the nation’s fiscal well being.

EDIS would introduce a collective, supranational security internet constructed upon home provisions and paid for by banks in line with their stage of danger.

In follow, this EU-wide safety layer would dissuade purchasers from desperately withdrawing their deposits as quickly as dangerous information hit a financial institution, as was the case with Silicon Valley Financial institution.

However the sharing of banking dangers throughout borders was rejected by Northern European nations, who argued the eurozone’s monetary well being wanted appreciable enhancements earlier than establishing EDIS.

“An settlement on a typical deposit insurance coverage was hampered by the weak state of the banks in some peripheral nations, with Germany fearing that it must pay for Italian banks,” stated Daniel Gros, a senior fellow on the Centre for European Coverage Research (CEPS).

Advertisement

“The current turmoil shouldn’t be brought on by the absence of a 3rd pillar, however by the truth that deposits have turn into rather more unstable than anticipated by regulators (and markets).”

Nicolas Véron, a senior fellow at Bruegel, believes the opposition runs a lot deeper and relies on an intrinsic contradiction: whereas nations “pay lip service” to European ambitions, they’re eager to retain nationwide management.

“In a manner, governments are of two minds,” Véron instructed Euronews.

“On the one hand, they perceive that finishing the banking union is critical for the eurozone to be resilient, they usually need the eurozone to be resilient sincerely. However on the similar time, there are such a lot of facets of the linkages they’ve with nationwide banking sectors that they like and do not need to eliminate.”

The persistent stalemate has raised doubts over the 2015 proposal, which technically stays on the desk regardless of quite a few rounds of unsuccessful negotiations.

Advertisement

“We nonetheless suppose EDIS is a good suggestion. However because it’s with the co-legislators now, it is a part of the traditional decision-making course of,” a European Fee stated.

As an intermediate step, the EU’s government is engaged on a “widespread framework for financial institution disaster administration and nationwide deposit assure,” in step with the conclusions of a 2022 euro summit.

However that framework is about to fall in need of a fully-fledged European scheme, consolidating the lacking pillar because the elephant within the room.

In response to the most recent monetary jitters, some EU leaders, similar to French President Emmanuel Macron and Dutch Prime Minister Mark Rutte, known as for the completion of the banking union however with out providing a transparent reply on how you can break the deadlock.

In an announcement to Euronews, the German Federal Ministry of Finance stated “a number of preconditions should be fulfilled” earlier than resuming talks on EDIS, similar to an additional discount of banking dangers, a stronger disaster administration framework and measures to restrict the sovereign-bank nexus.

Advertisement

“It is nonetheless considerably untimely to attract conclusions from present circumstances on future regulation. We’ll want extra detailed evaluation,” a spokesperson from the ministry stated.

For Véron, who has intently adopted the talk across the banking union since 2012, the current dialog lacks the momentum that solely a full-scale disaster can create.

“This type of factor solely makes progress when there is a large disaster. And sorry if what I say sounds too cynical, however I believe at this level there is not an enormous banking disaster within the eurozone,” Véron stated.

“That is nice information as a result of it suggests the European Central Financial institution has been doing a good job as a supervisor. Perhaps we’ll uncover tomorrow morning that some eurozone banks have large issues. However at this level, it hasn’t been the case, even with what’s occurred within the market.”

Advertisement
Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

World

Brad Pitt Spent ‘Months’ in Racecar Driver Training for His Upcoming F1 Movie

Published

on

Brad Pitt Spent ‘Months’ in Racecar Driver Training for His Upcoming F1 Movie

Brad Pitt has put in a lot of work to get ready for his role as a Formula 1 driver. 

Jerry Bruckheimer, who serves as a producer on the highly anticipated racing film, recently opened up about Pitt’s skills behind the wheel and how the actor prepared for the still-untitled movie.  

“He trained for four or five months. He’s an amazing driver,” Bruckheimer told People magazine while attending the Los Angeles premiere of Young Woman and the Sea. “In fact, some of the F1 drivers said he’s a natural athlete. He really is. He’s amazing in that car.” 

Pitt is set to star in the forthcoming Joseph Kosinski-directed project as veteran F1 driver Sonny Hayes. It was previously reported that seven-time world champion Sir Lewis Hamilton would act as a consultant for the film and help the 60-year-old actor train for the high-speed sport. Speaking of which, if you’re curious about how fast Pitt has been whipping around the course, well, Bruckheimer couldn’t exactly say. “I can’t tell you. The insurance company will kill me,” he told People

The movie itself was acquired by Apple Studios and began filming in July at last year’s British Grand Prix. Kosinski and Bruckheimer, who worked together on Top Gun: Maverick, assembled an 11th team to compete at the event. During the competition, Pitt took a spin around the Silverstone racetrack while spectators looked on. “I’m a little giddy right now, I’ve got to say,” Pitt said, speaking to Sky Sports. “I don’t know if you could call mine a hot lap, I’d call it kind of a warm lap. I’ve taken a few tours, unintentionally, through the grass.” 

Advertisement

While the project has mostly been kept under wraps, we do know that Pitt is slated to appear alongside Damon Idris and Javier Bardem. A few key details have also emerged about the plot. “I would be a guy who raced in the 90s,” Pitt explained to Sky Sports. “He has a horrible crash and kind of craps out and disappears and then is racing in other disciplines.”

“Then his friend, played by Javier Bardem, is the team owner. They’re the last place team, they’re 21, 22 on the grid, they’ve never scored a point and they have a young phenom played by Damson Idris and he brings me in as kind of a Hail Mary and hijinks ensue,” Pitt continued.

According to Collider, the long-awaited sports drama has allegedly set a premiere date. The website reported on Thursday that the movie will hit IMAX screens on June 27, 2025, which, if it happens, would be on par with the film’s original release timeframe.  

Continue Reading

World

Slovakia's prime minister underwent another operation. He remains in serious condition

Published

on

Slovakia's prime minister underwent another operation. He remains in serious condition

Slovak Prime Minister Robert Fico has undergone another operation two days after being shot multiple times and remains in serious condition, officials said Friday.

Fico, 59, was attacked as he was greeting supporters after a government meeting in the former coal mining town of Handlova. A suspected assailant has been arrested.

SLOVAKIA PRIME MINISTER ROBERT FICO SHOT MULTIPLE TIMES, IN ‘LIFE-THREATENING CONDITION’

Miriam Lapuníková, director of the University F. D. Roosevelt hospital in Banska Bystrica, where Fico was taken by helicopter after he was shot, said Fico underwent a CT scan and was awake and stable in an intensive care unit. She described his condition as “very serious.”

She said the surgery removed dead tissues that had remained inside Fico’s body.

Advertisement

“I think it will take several more days until we will definitely know the direction of the further development,” Robert Kaliniak, the defense minister and deputy prime minister, told reporters at the hospital.

A man walks with an umbrella past the F. D. Roosevelt University Hospital, where Slovak Prime Minister Robert Fico, who was shot and injured on May 15, is being treated, in Banska Bystrica, central Slovakia, Friday, May 17, 2024. Fico, 59, was shot multiple times on Wednesday as he was greeting supporters after a government meeting in the former coal mining town of Handlova. Officials at first reported that doctors were fighting for his life but after a five-hour operation described his situation as serious but stable.  (AP Photo/Denes Erdos)

Still, Kaliniak stressed that the government continues to work.

“The ministries are working on all their duties, nothing is frozen or halted, the country goes on,” he told reporters. “The state is stable and today the patient is stable as well.”

Fico has long been a divisive figure in Slovakia and beyond. His return to power last year on a pro-Russia, anti-American platform led to worries among fellow European Union and NATO members that he would abandon his country’s pro-Western course, particularly on Ukraine.

Advertisement

World leaders have condemned the attack and offered support for Fico and Slovakia. On Friday, the Slovak press agency reported that Pope Francis has sent a letter to President Zuzana Čaputová,

“I condemn this cowardly act of violence and assure you of my prayers to the Lord for the speedy recovery and recovery of the Prime Minister,” Francis said in the letter published by the agency.

Earlier Friday, the man charged with attempting to assassinate Fico was escorted by police to his home. Local media reported that it was part of a search for evidence.

Markiza, a Slovak television station, showed footage of the suspect being taken to his home in the town of Levice on Friday morning, and reported that police had seized a computer and some documents. Police didn’t comment.

Prosecutors have told police not to publicly identify the suspect or release other details about the case. The suspect’s detention will be reviewed at a hearing Saturday at Slovakia’s Specialized Criminal Court in Pezinok, outside the capital, Bratislava.

Advertisement

Unconfirmed media reports suggested that he was a 71-year-old retiree who was known as an amateur poet, and may have previously worked as a security guard at a mall in the country’s southwest.

Government authorities on Thursday gave details that matched that description. They said the suspect didn’t belong to any political groups, though the attack itself was politically motivated.

Slovakia’s presidential office said Friday that it was working to organize a meeting of leaders of all parliamentary parties for Tuesday. Čaputová, the outgoing president, announced the plan together with President-elect Peter Pellegrini, who succeeds her in mid-June, in an attempt to reduce social tensions in the country.

At the start of Russia’s full-scale invasion in February 2022, Slovakia was one of Ukraine’s staunchest supporters, but Fico halted arms deliveries to Ukraine when he returned to power, his fourth time serving as prime minister.

Fico’s government has also made efforts to overhaul public broadcasting — a move critics said would give the government full control of public television and radio. That, coupled with his plans to amend the penal code to eliminate a special anti-graft prosecutor, have led opponents to worry that Fico will lead Slovakia down a more autocratic path.

Advertisement

Thousands of demonstrators have repeatedly rallied in the capital and around the country of 5.4 million to protest his policies.

Fico said last month on Facebook that he believed rising tensions in the country could lead to the killing of politicians, and he blamed the media for fueling tensions.

Before Fico returned to power last year, many of his political and business associates were the focus of police investigations, and dozens have been charged.

His plan to overhaul of the penal system would eliminate the office of the special prosecutor that deals with organized crime, corruption and extremism.

Advertisement

Continue Reading

World

State of the Union: sunshine in Ankara, darkness in Tbilisi

Published

on

State of the Union: sunshine in Ankara, darkness in Tbilisi

This edition of State of the Union focuses on the continuing diplomatic détente between Turkey and Greece and the escalating domestic upheaval in Georgia.

ADVERTISEMENT

Just a year ago, a summit meeting of the leaders of Turkey and Greece would have created sensational news.

But when President Recep Tayyip Erdoğan hosted Prime Minister Kyriakos Mitsotakis in Ankara this week, it was almost a routine talk between neighbours.

The meeting was their fourth in 10 months as the two leaders try to put an end to decades of mutual animosity by focusing on trade, tourism, energy and repairing cultural ties, among other areas.

“In the critical area of migration, the cooperation between our two countries and especially between the police and the coast guard is paying off against illegal flows and against the wretched traffickers, who take advantage of desperate people’s pain,” said Mitsotakis in a common press conference.

“This cooperation must continue and be intensified.”

Advertisement

There are still areas where both sides have agreed to disagree, but it’s good to see one old trouble spot in Europe sort of fading, especially as another trouble spot reignited big time this week.

Thousands of protesters in Georgia rallied near the parliament building in Tbilisi – again – just hours after lawmakers gave the final approval to the controversial foreign influence law, modelled on a Russian version passed more than a decade earlier. 

Lawmakers passed the law despite EU warnings that it would undermine Georgia’s path to EU membership.

Yet, the official reaction in Brussels was muted.

Speaking in Denmark, EU Council President Charles Michel said: “I had a phone call a few days ago with the Prime Minister and I told him that I am disappointed and that I sincerely hope that Georgia will find a way to stick to the democratic principles and also meet the expectations of the population.”

Advertisement

Meanwhile, the European Bank for Reconstruction and Development released its latest economic outlook. The numbers for Georgia, which is part of the area where the EBRD operates, were rather sobering.

In general, the forecast also contained some encouraging news.

To learn more, we spoke to Beata Javorcik, chief economist of the EBRD.

Euronews: So, your latest report is appropriately called “Taming Inflation” – and when I look at the numbers, inflation in the EBRD regions came down from a peak in October 2022 of 17.5 percent to an average of 6.3 percent last March. Explain that number for us, what is behind such a huge drop?

Javorcik: What has helped bring the inflation down was to a large extent, the developments in the international markets. We have seen a sharp drop in the prices of natural gas in Europe, declines in prices of agricultural commodities, and oil prices have remained moderate. But, of course, inflation in our regions of operations still remains above the level before the pandemic, as is the case in advanced economies.

Advertisement

Euronews: Can you breathe a sigh of relief now or are there still important inflation risks remaining?

Javorcik: Not all central bankers can consider their job done. If you look at cumulative inflation, that is inflation since February 2022 up until now, it has exceeded 30% in several countries. Notably in Egypt, in Turkey, in Hungary and Kazakhstan, Moldova and Ukraine. So, that means that in the absence of wage increases, people in those countries would have lost a third of their purchasing power.

Euronews: Let’s talk about the growth outlook in the EBRD’s EU regions – do you see positive signs going forward?

ADVERTISEMENT

Javorcik: This year is going to be much better than last year for the Eastern European EU member states, in particular Poland and Croatia, stand out with expected growth of 3%. Hungary will do well, too. We see real wages increasing. We see fiscal policy helping out and the EU funding, the New Generation EU, also stimulating economic activity.

Euronews: I can’t release you without a word on Ukraine. How is their economy doing in the third year of the war?

Javorcik: The heavy bombings in the last two months mean that the ability of Ukraine to generate electricity has been severely diminished. Electricity production is at 40% of what it used to be before the bombings. And this capacity cannot be easily repaired.

Advertisement

—-

Looking for something fun to do over the weekend? 

How about jumping from a helicopter at 3,000 feet high, diving down to 35 metres above the River Thames and then soaring through London’s Tower Bridge only to rise up again to 80 metres, the height required to open the parachute before landing safely?

ADVERTISEMENT

This is a complex James-Bond-like manoeuvre known among insiders as a “flare”.

Well, two professional skydivers from Austria did it this week and described the experience as “a dream come true”.

And this coming from veteran skydivers with more than 22,000 jumps under their belt…

From take-off to landing, the London wingsuit flight covered more than a kilometer and reached a top speed of almost 250 kilometers per hour – and it lasted 45 seconds.

Advertisement

That might not be enough fun for an entire weekend, but it’s a start!

ADVERTISEMENT
Continue Reading
Advertisement

Trending