EUParliament Liberal MEPs Head Verhofstadt to EuroFora:Pressure for Real Resolution in Banking Union

*Strasbourg/EU Parliament/Angelo Marcopolo/- Experienced former Prime Minister of Belgium, and President of the Liberal Group of MEPs in EU Parliament, Guy Verhofstadt, replying to an "EuroFora"'s Question, made it clear that ECB's recent success on Markets must not drop the "Pressure" on States to complete EU's Banking Union with an urgently needed Real Resolution Mechanism, "the fastest possible".Simply because EU Member States cannot have a real Banking Union without a Real Resolution Mechanism, which seems to lack in a controversial EU Commission's Draft revealed recently, he explained at a Press Conference in EU Parliament in Strasbourg.

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- Obviously, completing the Economic Governance of €urozone is Important. But, ... from the point of view of Timing, is there any chance Not to Delay the process too much ? Or, perhaps, you believe that the most important is to settle the substance" of the issues, "so that the Timing might be a Secondary matter, comparatively", "EuroFora" asked Verhofstadt.

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- "I think that, what is necessary, is that we (EU) continue Reforms at EU level, that we desperately need", in order "to overcome this Crisis" :

=>  - "That means, Economic Union, Fiscal Union, (and) Political Union, as well as a Banking Union", stressed the President of EU Parliament's Liberal Group in reply to "EuroFora"s question.

- "And, my point is that, when we look at one of those elements, f.ex. the Banking Union, which is the most Urgent, and (particularly) the Goal to cut the Sovereigns (Debts) from the Debts in the Banks", (See Infra),  then, "we see, with the last proposal by EU Commission, that we (EU) are going in the Wrong Direction", Verhofstadt warned.  

             
- "That is my fear, at this moment, that, because of the OMT operations of the ECB, which have (succeeded to) get down the Markets, but not only them : This has also taken Pressure away from the Political Leaders in Europe, to do the Reforms that are necessary", he denounced, smiling.

- "I'm not criticizing the OMT operation(s), I think that what (ECB's President) Mr Draghi did on the 6th of September (2012), .. was absolutely necessary, but it's clear that it has taken pressure away also from the (EU) Political Leadership in Europe to go forward with a number of necessary reforms", Verhofstadt observed.
+ "And, Proof for that, you can find in the latest (EU Commission's) proposal on the Banking Resolution", the President of EU Parliament's Liberal Group of MEPs  criticized in reply to "EuroFora"s  query. 

                                                                                                                                                                                                                         - Because, "it's clearly a system that doesn't cut the Sovereign (i.e. State Debts) from the Banking Debts", he mainly pointed out.

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In particular, the President of EU Parliament's Liberal Group  criticized the fact that, at its current state, in EU Commission's Draft proposal, "on the on-going €uro-Crisis, I see a Danger to fall in Complacency, about this", as he said.

- It's clear that many Political Leaders in (EU) Member States believe that it's possible to "escape" the Necessity of further (EU) Integration, in order to solve the EuroCrisis", he denounced earlier.

- "And one clear example of that is what has just been put on the table, apparently by the EU Commission, on the Resolution Mecanism of the (EU) Banking Union" :

 - Because, "as you know, in order to have an (EU) Banking Union, you need to have, not only a Single Superviror, proposal that is (already) on the table now, and discussed between the (EU) Council and the Parliament, but you need also a Resolution Mecanism, the Fastest possible", he explained.

- But, "yesterday, it was revealed that EU Commission has proposed a Banking Resolution mecanism that would be an "Empty" one !", Varhofstadt denounced.

    - Indeed, "For a Real Resolution Mechanism, you need Funds, you need a European System, Decision-making procedure, but you need also a system which can Split between Sovereigns, on the one side, and Banks at the other side, because that's what the Banking Union is all about" : I.e. "To make a Split (Distinction) between the Debt Problems of the Countries, i.e. the Sovereigns, and the Banking problems. And you need also a "Burden-Sharing", because, "if you have f.ex. a Big Bank specialized in CrossBorder operations, it can be so Large, that, rescuing that Bank, can put a State in Danger" :

- "I can give you the example of the Irish, before the (EU) Banking Union" : Indeed", before the Crisis, the Debt was 44% of GDP, but after Rescuing those Banks, they (the Irish State) got a Debt of 142% of GDP. So, the whole Ireland has been put into Difficulties, very near to insolvency, because of their Banking problems. So, you need a European Resolution Mecanism that can help Countries like Ireland, like Spain, like Cyprus (f.ex. with "Marfin" Bank, etc), and others, (f.ex. Iceland, as its Economy Minister recently explained to "EuroFora" and other Journalists, at the CoE in Strasbourg)..

- "And it's not the case of the proposal of EU Commission, as it has been revealed by the "Financial Times" yesterday". Because "that proposal, still says, that it's mainly up to the States to do the job. So, it's not cutting the link between (EU Member States' Debts') Sovereigns, at one side, and Banks at the other side".

- On the contrary, "what we (EU) need is  a system where, even if it's for (EU) Member States who have to intervene at first stage, but when the (Bank) Rescue Amount is, f.ex. Higher than 10 % of the Country's GDP, then, the European system has to come in. Then the ESM (EU Solidarity Mechanism) has to come in". I.e., "if a (Banks') Rescue amount is so important that it might put a Country in serious Difficulties, i.e. obliging her to Refund itself by Loans with Heavy Interest Rates, then the ESM has to come in, with a kind of Burden-Sharing between (EU) Member States", he advised.

=> "If we don't have such a Resolution Mechanism, then, (in fact) you don't have a real Banking Union as such, and we fall Back in what we have until now, i.e. mainly the (EU) Member States remaining alone responsible for their own Banks", Verhofstadt warned.