The European summit turned out to be a dud, even given the very low expectations. Dedicated sections on both the summit and European banking union design.
Previously on
MoreLiver’s:
GENERAL
Whither the Euro? Seeking Resolutions for the
Eurozone – CFA
Institute
Not
surprisingly, a major theme of this year’s CFA Institute European Investment
Conference in Prague was the prospect for the euro. Most speakers opined on the subject,
sharing and supporting their various arguments.
Brussels blog round
up for 13 – 19 October – EU summit, the Banking Union and who should collect the EU’s Nobel Prize? – europp
/ LSE
Analysis: Nobel-crowned EU risks future as
loveless marriage –
Reuters
The
European Union's Nobel peace prize comes just as a realization is dawning that Europe's single currency - the EU's most
ambitious project - has survived three years of incessant financial turmoil and
is not going to break up.
The eurozone crisis -
causes and solutions – BIS
(pdf)
Knot, President of the Netherlands Bank, to the Asia Society, Hong Kong, 15 October 2012.
The UK sees
banking union and deeper integration of the eurozone as a chance to renegotiate
its own status in the EU, Prime minister Cameron confirmed on Friday.
Slovenia was in
the market on Friday — with $2.25bn of bonds. That’s greenbacks, not euros,
despite belonging to the currency union.
Foreign buyers and
the OMT – alphaville
/ FT
Barclays and UBS have
noted the recent halt in foreign liquidation of Spanish bonds — although with
different views on what’s caused it and what comes next.
The worst is over for
the euro zone? Shh! Stop saying that! – MacroScope
/ Reuters
Often, horror films in a series become worse with each
sequel, becoming messier with each tired return to a franchise. The euro zone
debt crisis — a particularly depressing horror with real and terrible
consequences for many of its citizens — appears to hold true to that.
PIIGS
Why Rajoy's 'Delay-And-Pray'
Strategy Won't Work – ZH
UBS: the hope that Spain will
request a bailout anytime soon is misplaced as there is no immediate pressure
to do so and the government would prefer to negotiate a more favorable MoU.
However, two major issues stand in the way of that delayed reality - an
insufficient bank recap; and the federal nature of Spanish government creating
obstacles to deficit reduction.
Spectre of Spanish
bailout – El
Periódico de Catalunya / presseurop
The banking union agreed by European leaders on 18
October is just one of a set of measures that also includes supervision of
national budgets and a greater role for the ECB. And the goal of these
manoeuvres is to determine if, and how, Spain will ask
for help.
The return of the
Greek buyback (boondoggle) – alphaville
/ FT
Euro-zone countries are considering a proposal that
would see Greece cut its
debt by buying back bonds held by private creditors at a discount.
Spanish Military
Association Wants "Declaration of War" Against Separatist Catalunya;
Expect More Extremism – Mish’s
SUMMIT
EU Summit: Another
Plan to Plan – economistmeg
All in all, this summit has teed up a number of issues
surrounding the creation of the SSM and a banking union that policy makers will
have to thrash out in the lead-up to and during the EU summit in Brussels in
December. EU leaders hardly addressed the issue of a common EZ budget, but Van
Rompuy highlighted that this too will be discussed in December.
Sorry to quibble, but there was no EU banking union
deal last night. It was a step backwards from agreements already made in June. Germany has
succeeded in kicking the issue into touch until after the Bundestag elections late
next year. There will be no decision until deep into 2013 on whether to
recapitalise the banks (ie crippled Spanish banks) directly through the
European Stability Mechanism.
EU leaders left Brussels Friday
after having spent the best part of the meeting tweaking wording on a banking
union that was supposed to have been clear in June. But the German slower
timetable prevailed.
EU banking
supervision is no triumph – The
Telegraph
Last night’s summit deal on banking supervision was no
triumph. It was another EU exercise in decision dodging and fudge as German
procrastination won the day.
Pass The Salt; Pass
The Government – Mark
Grant / ZH
How many European nations does it take to screw in a
light bulb? Twenty-seven…In the recent summit, however, they couldn’t even
identify the light bulb.
Were Hollande and
Merkel at the same summit? – alphaville
/ FT
Listening to the comments of the various European
leaders this morning, you’d be forgiven for thinking that they were attending
different summits yesterday.
BANKING UNION
EU Tussle Over Costs
Threatens to Derail Bank Union Plan – BB
The French-backed effort to fast- track a European
bank supervisor is running into German-led concern over potential costs as the
region’s leaders tussle over putting their crisis-fighting blueprint into
action.
With most of the debate around banking union in the
Eurozone focusing primarily on the financial institutions it will regulate,
this column argues that the issue of sovereign debt of the members of the
Eurozone needs also to be taken into account.
Bank reforms risk
more shadow banking - ECB's Liikanen – Reuters
One of the dangers of banking sector reforms is that
more banking business is driven into the shadow banking sector and this risk
must be monitored constantly
Europe is trying to achieve
a stronger federal model that responds to the weaknesses revealed by the
eurozone crisis, but it is doing so without addressing the need to bring its
citizens along. That is also true of proposals for a banking union, with the EU
adopting devices that are designed to avoid having to consult them.
Banking union as a
crisis-management tool – voxeu.org
Countries have various mechanisms that provide lending
when a bank fails. But when bank problems far exceed available resources, central
banks must be lenders of last resort, even when their role is clouded to
mitigate moral hazard. This column explains the ECB is ill-equipped to act as
such a lender; it doesn’t have enough control due to coordination problems
across countries. The column argues this must change. The ECB must be the
lender of last resort and this involves a Eurozone banking union.
Why the rush?
Short-term crisis resolution and long-term bank stability – voxeu.org
The Eurozone crisis has shown that the traditional
approach of EU supervisory cooperation is not enough. This column argues the
gaps in cross-border bank regulations have to be addressed on three levels: A
short-term crisis resolution mechanism for the Eurozone, a functioning banking
union, and stronger cooperation agreements across the EU and beyond.
Critically, such reforms have to start from the resolution component.
Legacy problems in
transition to a banking union – voxeu.org
As a banking union within the Eurozone seems ever more
likely, this column looks at banking union as a way of responding to the
crisis, but also as a way of preventing the next one.
Banking union: Where
we’re going wrong – voxeu.org
A piecemeal approach towards banking union is
emerging, with banking supervision first and resolution and deposit insurance
at some undefined later stage. This column argues that such an approach may
lead to an unstable banking union and that any attempt at banking union must
include an integrated deposit insurance and resolution authority in order to be
successful.
The political economy
of (eventual) banking union – voxeu.org
As the
debate regarding banking union in the Eurozone rolls on, this column tackles
the subject from a different angle – outlining the political economy
ramifications of such an undertaking.
Clock is ticking on
European banking union – bruegel
European leaders are meeting in Brussels almost
four months after their previous summit, at the end of June, where they
launched a project for European banking union and agreed on direct
recapitalisation of banks in crisis-hit countries. Since then the eurozone has
benefited from a respite, but in fact many of the decisions taken in June still
await implementation.
How to achieve a
balanced European Banking Authority – Open Europe
Proposals for a eurozone banking union, currently
being negotiated, could in future make it virtually impossible for the UK and other
non-euro countries to block financial rules written by and for the eurozone, in
turn fragmenting the single market. This would not be in the interest of most
EU member states – or the City of London.