The European Central Bank should do more to ensure that its cheap loans to banks were being passed on to the real economy and the ECB itself must become more transparent and accountable in line with its growing role in the Eurozone crisis says a resolution adopted by MEPs on Wednesday. On Tuesday MEPs discussed the work of the ECB with its President Mario Draghi.
From 1 January 2014, EU banks will be stronger. Changes voted by Parliament on Tuesday will cap banker's bonuses to curb speculative risk-taking, step up capital provisions to help banks cope better with crises and stiffen supervision. This EU banking reform package, the most comprehensive so far, should also spur growth, by making it easier for banks to lend to small firms that drive the real economy.
The EU Capital Requirements Regulation (CRR) and Directive (CRD) aim to stabilise and strengthen the banking system by making banks set aside more and higher quality capital as a cushion against crises. The new rules should also foster a convergence of supervisory practices across the EU. Banks that are better able to withstand future crises should be more capable of financing investment and growth.
MEP Sharon Bowles, Chair of the European Parliament's economic and monetary affairs committee welcomes the agreement on Cyprus, particularly the recognition that banks can fail and that the deposit guarantee principle must be upheld.
Investment fund managers' bonuses must be capped, their salaries must be linked to their funds' performance said Economic and Monetary Affairs Committee MEPs in a draft law voted on Thursday. Individual investors' money must also be better protected, they added.
Eurogroup chief Jeroen Dijsselbloem took responsibility for the rejected Cypriot bailout plan, adding that it was a "joint decision" in the Economic and Monetary Affairs Committee on Thursday. He also told MEPs he doubted that there really was a possible 'Plan B'. MEPs were severely critical of the way in which events had panned out over the weekend, with most insisting that that it was preposterous to tax small savers and that mistakes had been made on all fronts.
Following the Open Conference of Presidents in the European Parliament on 20 March 2013 on the outcome of the Spring European Council where the issue of the Cyprus banking sector was raised, European Parliament President Martin Schulz on behalf of the majority of political group leaders in the European Parliament Conference of Presidents - EPP Joseph Daul, S&D Hannes Swoboda, ALDE Guy Verhofstadt, Greens/EFA Rebecca Harms and Daniel Cohn-Bendit, ECR Martin Callanan, made the following statement:
Banking needs a culture change, which piecemeal legislation will not achieve on its own, says a draft report presented in the Economic and Monetary Affairs Committee on Wednesday. It advocates further, more radical reforms, including separating retail from investment banking, stimulating competition, improving corporate governance and crisis management, reducing complexity and curbing risk-inducing pay deals. The Commission is asked to table legislation to this end.
A deal on banking supervision legislation that will strengthen EU-level oversight of many EU banks was struck by Parliament and Council negotiators on Tuesday. Parliament's negotiators inserted many provisions strengthening the system's transparency and accountability. They also ensured that its working structures will be imbued with a European spirit, rather than reflecting just a sum of national interests.
The next round of EU economic governance legislation will do more to deliver growth and the European Commission's new powers to vet Eurozone countries' budgets will be better democratically controlled, thanks to the “two pack” economic governance legislation voted by Parliament on Tuesday. The rules also lay down clear procedures for countries seeking EU financial help.