Wait-and-see on Europe’s plan for banking union – Tonio Fenech

Finance Minister in disagreement with hurried roadmap for deeper, fiscal integration: ‘It’s not the way to do things.’

Lawrence Gonzi with EU president Herman Van Rompuy (file photo).
Lawrence Gonzi with EU president Herman Van Rompuy (file photo).

Malta is expected to adopt a wait-and-see position on proposals by the European Union to further deepen European integration with a banking union and the creation of a central treasury to monitor national budgets.

But finance minister Tonio Fenech has stressed his disagreement at the way EU President Herman Van Rompuy presented his 10-year roadmap to create the banking union and make a European federal state a more likely prospect.

"Such hasty proposals only contribute to confuse and create more market exasperation," Fenech told MaltaToday.

Fenech said proposals such as Van Rompuy's, which were leaked this week to German news agencies, must be brought before ministerial councils and discussed properly "rather than being imposed upon an already heavily-burdened agenda for European heads of government", who are in Brussels for a council meeting today and Friday.

Fenech said this will also be Prime Minister Lawrence Gonzi's position during the European Council in Brussels.

Malta will so far remain non-committal on Van Rompuy's proposals. "One must examine such proposals in detail, as 'banking union' is a rather grand word which will definitely cause further turmoil on the financial markets."

"I would rather wait for the conclusions of the European Council, rather than expressing disagreement with the way the proposals were placed on the agenda."

Swedish Prime Minister Fredrik Reinfeldt has already expressed his opposition to the Van Rompuy proposals, tweeting this morning that he has been "blocked" to discuss a Banking Union by Stockholm's parliament.

"Parts of it read like a wish list," Germany's deputy foreign minister Michael Link told journalists in Luxembourg, adding that the proposals lean "towards various models for mutualising debt. What comes up short is improved controls."

Bundesbank president Jens Weidmann said the discussion about introducing a banking union in the euro area could not take place without it being part of the debate on fiscal union. "It's important that a banking union doesn't lead to eurobonds by the back door," he said.

More centralised decision making would require states to seek approval before issuing government debt beyond agreed-upon limits. Countries that violate fiscal rules could be required to make changes.

The European Union's latest document on furthering monetary integration is calling on member states to give the Union greater powers to create a European treasury, which would have powers over national budgets.

The 10-year plan is intended to strengthen the eurozone and prevent future crises, as countries grapple with current debt problems.

The document said greater fiscal union could lead to common debt being issued by eurozone countries.

There would also be banking union, with a single European banking regulator and a unified deposit guarantee scheme.

The proposals include limits on the amount of debt individual countries can take on; annual national budgets can be vetoed if they are likely to mean a country exceeding its debt limits; a European treasury office to control a central budget and keep an eye on national ones; and even common policies on employment regulations and levels of taxation.

One of the big changes under the new proposals is that while in the past eurozone members had to keep their budget deficits below a certain level, a European treasury would be able to force them to make changes to their budgets to keep their deficits down.

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L-unika triq hija li nitilqu ghax se ninqerdu. Dan b'liema dritt jippretendu li ahna nsalvaw lill-kbar meta lanqas ghandna ghalina? Kif jippretendu li niggarantixxu l-biljuni ghal haddiehor li kien inkompetenti? Hemm bzonn nitliqu ghax l-ewro u l-unjoni ewropea mghandhomx hajja twila u jaqblilna nitilqu qabel ikun tard wisq ghax ikunu qerdulna pajjizna iktar milli hu meqrud u nispiccaw id wara u ohra quddiem.
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Tonio, qalbi, l'hemm sejrin. Kollox integrated irid jigi. Kollox haga wahda. Il-kbir jithallat maz-zghir. U taf x'jigrilu meta z-zghir jilghab mal-kbir hux? Tghidlix li ghadek ma ttendejtx!
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Luke Camilleri
Mhux dejjem "wait and see" u s-salarju ghaddej....