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European Central Bank in Frankfurt: joint liability as a point of contention

Photo: Boris Roessler / dpa

Since the great financial crisis of 2008 and 2009, there have been stricter rules for the banking sector in Europe than elsewhere. However, a complete banking and capital markets union, which could ensure even more stability and a greater willingness to invest, has not yet been achieved in the EU. The 27 EU heads of state and government now want to change that.

Open, well-functioning and integrated financial markets are crucial for the EU internal market, according to a statement adopted by the Eurozone summit in Brussels. This is necessary to stimulate investment and greater competitiveness. The European Parliament and the Member States are called upon to quickly implement the plans to complete the capital market that were already decided in 2020.

Quick money for climate change

The President of the European Central Bank (ECB), Christine Lagarde, also pushed for these reforms in the discussion with the EU-27 in Brussels. The economic resilience of the Eurozone requires higher productivity, which in turn requires higher investment. The Capital Markets Union is key to promoting investment, she said.

Before the summit, Chancellor Olaf Scholz also warned that financing for start-ups in Europe was much slower than in the USA. The Capital Markets Union should make it easier for small and medium-sized companies to get money. More private capital must also be mobilized to finance the transformation of the economy and society towards climate neutrality. In fact, the EU has a huge need for investment here, just as it does when it comes to defense.

One of the points of contention in the plans for a European capital markets union is the question of securing bank deposits and the question of joint liabilities. So who will step in and do what if a bank active in several EU countries collapses?

The SPD politician also called for less bureaucracy at the European level. »The Commission has announced that it will abolish 25 percent of the reporting requirements for companies. That's a start, but there's certainly more to be done after the European elections," said the German head of government, referring to the vote in June.

Europe has grown from the crises of recent years, but needs to further strengthen the EU, for example by reforming the internal coordination processes. “A reform roadmap should be in place by June,” said Scholz. A Europe capable of acting is the best answer to extremists and populists that exist in almost all European countries.

April/Reuters