Important and necessary reforms are currently delayed by the European Council. After the heads of governments boasted with clear statements to impose a strong and effective regulation on the financial markets their reforming efforts lack progress. Many reform proposals by the Commission have been adopted by the Parliament years ago already but are still awaiting the Council’s approval. On Thursday last week, the European Parliament adopted a resolution calling the Council and the Commission to finalise the unfinished procedures before the end of the current legislative term in 2014. The resolution contains a detailed list of all pending legislation on financial markets.
Sven Giegold, Green spokesperson for economic and monetary policy in the Parliament, welcomes the resolution:
“Numerous financial markets and insurance regulations discussions between the co-legislators Council and Parliament are slowed down drastically because the Council lacks a negotiating position. Member States ignore their public promises to swiftly find compromises. The European Parliament adopted a position on bank deposit guarantee schemes, investor compensation schemes, financial instruments and OTC derivatives, central counterparties and transaction registers (MiFID II) a long time ago. The Council still didn’t come to an internal agreement on any of these important files which are crucial for curbing food speculations, limiting high frequency trading, protecting bank deposits and transparency in derivatives trading. Moreover, the Council refuses to cooperate on further important proposals regarding better consumer protection in insurance broking, short information for consumers about financial products (PRIPS), the protection of investors (UCITS V) and the right to a basic bank account for everyone. The Council presidency simply doesn’t schedule meetings of the relevant work groups.
To meet their responsibility in legislation, according to the treaty the negotiating positions of the Council must be adopted by a qualified majority. Instead power-political and intergovernmental arrangements between the representatives of France and Germany set the tone, and force others into a consensus, before negotiations can move on. This causes unacceptable delays in fixing the problems that led to the financial crisis. The current debate about a European resolution authority and the stocking negotiations about the liquidation of credit institutions and investment is a typical example of this obsolete model.
Members of the Parliament call for more transparency in decision processes within the Council. Backgrounds and criteria on which decisions to proceed with files or not must be transparent. Furthermore, the Council has to explain how in future the transition between incoming and outgoing presidencies can be improved. The Greens’ position is clear: The time of back-room deals in European policy must come to an end regardless of how much Hollande and Merkel favor this kind of procedure.
Finally, the resolution of Parliament contains several criticisms of the Commission for delays in proposing overdue legislation. For example a proposal for the restructuring of banks that were designed in cooperation with the Liikanen-expert group or a proposal about the shadow banking system and money market funds are due since several months. Nonetheless, the focus of criticism is addressing the Council which is delaying and blocking important reforms in financial and insurance regulation.
Good news is that the Parliament requests the Commission to follow the recommendations of the European Systemic Risk Board to forbid guarantees on money market funds (CNAV).”
The heads of governments must meet their responsibility towards citizens and must get out of the reform deadlock. You can watch my two minute plenary on the matter speech here.