Schulz on banking union: 'The slower and more inefficient a system is, the more expensive it will be'

The banking union risks missing its goals under plans put forward by the EU’s finance ministers this week, warned European Parliament President Martin Schulz. He issued the warning to EU heads of state in a speech at the opening of the Council summit in Brussels on 19 December at which the economic and monetary union would be discussed. Talking about the resolution system for dealing with failed banks, he said: “The slower and less efficient a system is, the more expensive it will ultimately be for everybody.”

Schulz said the banking union would only work if there was a European approach instead of leaving it up to member states, which would make it difficult to make a quick decision when a bank was experiencing difficulties. “If a bank cannot be wound up within a weekend in order to prevent a run on the banks, the system is too complicated,” Schulz said. “The Commission must play a central role here, rather than untransparent bodies with untransparent interests – otherwise it will ultimately be a case of ‘Operation successful, patient dead’.”
He also criticised plans for a resolution system based on national funds instead of a single resolution system for the transition phase: “Ultimately, the taxpayer will once again have to come to the rescue after all. That contradicts the fundamental idea of the kanking union, which is that banks should come to the rescue of banks!”

In addition,Schulz proposed to improve the European Semester, which enables member states to co-ordinate their economic policies: “We believe that transparency and democratic accountability at European level need to be further increased in order to foster greater acceptance and thus increase the success of the semester.”