11 April 2014

Barnier: “We set up the Banking Union in record time”

You were not chosen as the right’s candidate for president of the Commission. Are you paying the price for your centrist tendencies in the UMP?

The UMP and its president, Jean-François Copé, were incredible with the support they gave me during my campaign, at the heart of the EPP. Jean-François Copé stood in front of the congress and said it. All French MEPs, including some centrists, showed up to bring their support. I achieved 40 per cent of congress’s vote. I do not regret provoking a democratic choice and now that it is done, I support our candidate.

Are you tempted by the centrist alliance for the European elections?

I have always been Gaullist and European, in a political party which has not always been the most pro-European, but where I feel at home. I believe that the republican and European right must be connected to a strong centre. This is how France’s alternative will be created, and it must be prepared. In my book, I try to explain how we can be patriotic and European, and that what is at stake today. What politicians of the right and the left must explain, is the independence and freedom of Europeans and their children in tomorrow’s world.

I tried to describe what must be done in the next five to ten years in order to preserve our freedom. That is how serious it is. In 2050, there will not be a single European country in the G8.

An agreement was reached in March on the Single Resolution Mechanism (ESM), which will be financed with over €55 billion. Can we claim today that the banking union has been completed, as European leaders promised in October 2012? What is left to be done?

We set up the Banking Union in record time. It was in April 2012, only two years ago, that President Barroso proposed advancing financial and banking integration. This idea can be found in the report from the four presidents of the European Council of 29 June 2012. In September, I presented the first part (the supervision) which was adopted in March 2013. In July 2013, I presented the second part (the Single Resolution Mechanism) which was agreed on in March 2014.

Therefore, in less than two years we revolutionised the banking sector. We can now prevent, supervise and deal with crises together. We broke the vicious circle between sovereignty and banks, and now have banks that live and eventually die at a European level.

Now we must ensure that it is put into practice and becomes operational. Decisions have been made, and the European Central Bank should be ready to supervise the 6,000 banks of the Eurozone by 4 November 2014. We have also set the timeline for the Single Resolution Mechanism.

Exactly. The €55 billion for the Single Resolution Mechanism will not be available before eight years, time to allow banks to contribute to the fund. What will happen if a bank fails following that year’s stress tests? Will taxpayers be put at risk?

We will deal with all future crises with the mechanism, not just those from yesterday or the day before. Therefore, if there are difficulties, restructuring needs or financing needs following “moment of truth” tests by the ECB and the EBA, we will cope with them using today’s instruments. Actually, banks have been restructuring over the past four years. They have recapitalised by hundreds of billions of euro over the past five years.

So the risks have been reduced?

I think the European banking sector is more robust. Above all, the objective for the future is that there are less possible bank failures, and that we reduce the risk of failures. Banks will be more effectively supervised, governed and capitalised thanks to legislation that we have worked on for four years, and that are now operational, or soon to be.

Will there ever be another crisis? I cannot answer that. If there is a crisis now, we will have the tools to solve it. The resolution mechanism will be put in place in 2015, and operational in 2016. If there is a crisis at the start of the mutualisation period, the resolution mechanism will be able to lend money.

Are you happy with the new architecture of European economic governance? The 6-pack, 2-pack, budgetary treaties, it is all a bit complicated for the layman… Are there elements that you would change?

Of course there are elements that need to be changed, and lessons to be learnt. For five years we acted with our backs against the wall, in urgency, and sometimes with adjustments. I was one of the first to say that we had to differentiate between the efforts that were required. Too much rigor and austerity can kill economic growth. Hence, one must know how to differentiate by country and time period. We are doing this now.

One day there should be a president of the Eurogroup who is also vice-president of the Commission, so that we have a system which is parallel to foreign political systems. We also need changes to the treaties for the Eurozone to work better and be more democratic.

Full interview

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