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EU pushes more moves to stem debt crisis
European Union officials pushed on yedterday to accelerate moves to stem the bloc’s long debt crisis as Italian premier Mario Monti warned that economic suffering was fuelling divisive nationalism on the continent. Monti said he had proposed an EU summit in Rome to discuss the rise of anti-European populism, divisions between north and south and nationalistic prejudices that have been fostered by resentment against austerity measures.
“Old stereotypes and old tensions have re-emerged,” Monti said. “There are many manifestations of populism that are aimed at disunity in nearly all the member states,” he told journalists at an economic conference in northern Italy. Monti’s remarks at a joint news conference with European Council president Herman van Rompuy underlined the urgency of overcoming a crisis that has lasted close to three years.
Van Rompuy said he supported Monti’s idea and favored bringing forward a meeting to foster European integration from its originally scheduled date in late 2014. Michel Barnier, the EU commissioner in charge of financial regulation, called in a Reuters interview at the conference for swift joint oversight of all euro zone banks. Euro zone-wide banking supervision should be introduced by next January, despite German reservations, he said.
That provided a new focal point in the crisis fighting two days after the European Central Bank announced a plan to buy bonds of weak member states to push down their borrowing costs. EU Economic Affairs Commissioner Olli Rehn told Reuters the conditions underpinning the ECB plan would be based on existing recommendations for countries like Spain and Italy.
Speaking on the sidelines of the same conference on the shores of Lake Como, Rehn appeared to be backing remarks by ECB executive board member Benoit Coeure who said countries applying for bond buying help might not have to make extra budget cuts. The idea of the program was not to “pile more austerity on top of austerity” Couere told France Inter radio, addressing a major concern in Spain and Italy where belt-tightening programs have aggravated deep recessions.
Centralised bank supervision
Barnier said the EU Commission’s banking sector plan envisaged centralised supervision for all 6,000 euro zone lenders, though oversight of some day-to-day matters such as consumer protection would remain with national authorities. “We know that all banks can cause problems. For this reason the logic of our proposals and the requests from the euro zone heads of state is to have a credible oversight of each bank in the euro zone,” Barnier said at the gathering of business leaders, politicians and EU officials.
EU finance ministers are meeting in Cyprus next week to discuss centralised banking supervision. German Finance Minister Wolfgang Schaeuble has said the ECB should only supervise big banks, and expressed doubts the EU can put in place such a mechanism by the January 2013 deadline. ECB President Mario Draghi unveiled plans on Thursday for potentially unlimited purchases of bonds with maturities of up to three years issued by countries that request European aid and fulfill strict domestic policy conditions.
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