EU Flash: Bank recovery and resolution, Taxation issues, Supervisory system plans (Weekly Update from 20-24/05/13)

27/05/2013

European Parliament Economic Committee (ECON) adopted report on bank recovery and resolution

On 20 May, the Economic Committee of the European Parliament voted on their report on bank recovery and resolution.

The proposed Directive for banks recovery and resolution would provide with rules on insolvency proceedings in the case of failing banks with the aim to safeguard financial stability and prevent public funding of losses as much as possible. The main objectives of the Proposal are the following: (a) Maintaining financial stability and confidence in banks, (b) Ensuring the continuity of essential financial services and avoiding contagion of problems, and (c) Minimising losses for society in particular for taxpayers and depositors.

Following to the ECON Committee vote, the European Parliament and the Council are expected to start trilogue negotiations soon. First, the Council has to take a general approach on the issue.

The plenary sitting is provisionally scheduled for 23 October.

European Council focusses on taxation issues

On 22 May, the Heads of Governments and States focussed during the European Council on energy and taxation issues.

On taxation, the European Council agreed to accelerate work in the fight against tax fraud, tax evasion and aggressive tax planning. In particular, work will be taken forward as a matter of priority on promoting and broadening the scope of the automatic exchange of information at all levels.

The Council will report back on progress on taxation issues by December 2013.

The official European Council conclusions, can be found here: http://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/en/ec/137197.pdf

Parliament backs EU banking supervisory system plans

On 22 May, the European Parliament adopted, in plenary, on a series of amendments to the legislative package establishing stricter banking supervision. In addition to the Regulation establishing a Single Supervisory Mechanism (SSM), the package includes a Regulation that aligns the working of the European Banking Authority (EBA) with the new supervisory structure.

The key elements of the legislative package adopted today are:

  • A new single European supervisory system will be established in which the ECB plays a key role and national watchdogs are closely involved.  The ECB has final responsibility and the power, if necessary, to intervene in any credit institution in any Member State taking part in the Single Supervisory Mechanism.
  • The 17 Eurozone Member States will participate in the mechanism. Non-Eurozone Member States can opt in. To encourage Member States from outside the Eurozone to participate in the system, they have been given equal rights on the Supervisory Board.
  • The ECB will be subject to strict demands as regards transparency and democratic accountability to the European Parliament when exercising its supervisory tasks.
  • The ECB's supervisory tasks will be strictly separate from its monetary tasks.
  • The EBA, a coordinating organ, is reinforced and adapted to the ECB becoming the new European supervisor.

As the Council is not yet able to give its formal and unanimous consent for the agreement reached (the German Parliament first needs to give the green light to the Minister of Finances), the European Parliament today only voted on the amendments but not yet the legislative Resolution. The EP will only hold its final vote in a future plenary session, expected in September. This will also allow the European Parliament to reach a satisfactory agreement with the ECB on the accountability of the ECB towards the Parliament.

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