This banking plan is the perfect example of what is happening within the EU; specifically, the EU has been bifurcated into two blocks, the haves and the have-nots. The haves in this article are Germany, Sweden, Denmark, Belgium and the Netherlands. The have-nots are led by France and include Spain and also Italy, Portugal, Ireland and Greece who are not mentioned.
A banking union presupposed some sort of deposit insurance. All of the have-nots banks are stuffed to the rafters with the sovereign debt of their host countries. Insuring the deposits of these banks would be like insuring the debt of the have-nots. There is no way that the haves want to be on the hook for all of the deposits in those dodgy have-not banks, so their objections are dilatory tactics.
Here’s an example of the tactics. Germany and Belgium raised objections to the number of banks that the ECB will be supervising under the union:
“It’s impossible for one single body to control 6,000 financial institutions,” Mr. Vanackere told reporters.
Vanackere is the Belgian finance minister. He is also incorrect about the feasibility of one body regulating 6,000 financial institutions. The United States’ very own FDIC regulates over 7,500 banks.
The have-nots want the banking union complete with a depository insurance scheme to go in effect immediately. As banking bailouts currently stand in the Eurozone, a country has to add the loans it takes on to bailout its banks to its total debt. If there is a banking regulator with a bailout fund, they will only be liable for a portion of this debt through the fund.
Did you notice that supposed Northern-tier country France is leading the have-nots? Don’t be surprised; France is in a lot more trouble than is being reported by the mainstream media. France is a lot closer to Italy’s financial condition than Germany’s.
What is left out of the article is more interesting than what is included. I would like to know Britain’s position with the ECB regulating banks? While the ECB may not have sway over the big British banks in London, it will certainly be regulating their branches on the continent and the Eurozone bank branches in London.
I have a feeling that Sweden and Denmark are speaking for Britain right now, but that Britain will let its objections be known shortly.