18 October 2012

EP President Schulz: Speech at the Autumn European Council

"This EU Summit will consider proposals which threaten to drive a wedge through our Union. I am referring specifically to the report of the 4+1 Group... It is an over-reaction to seek to split the EU simply because two countries have opted out of the currency union. Given that all the other EU Member States are bound by the Treaty to introduce the euro, we would be well advised to implement reforms which enable the 25 Member States which are keen to take part in all EU policies to do just that. Our first response to the stance adopted by the opt-out Member States should certainly not be to consider policies which might lead to the break-up of the Union."

Schulz then focused on three proposals which he said the European Parliament regarded as particularly important:

"Firstly, the establishment of a banking union is certainly a priority. It would have been better if the European Parliament had been involved in the discussion and shaping of this project under the so-called ordinary legislative (co-decision) procedure. I would also point out that many of the proposals now on the table were approved by us as part of the 'supervisory package' and fell foul of your lack of resolve. The Commission has now opted for a different legal basis. I acknowledge that, but at the same time I warn you that the European Parliament does not regard the division of the Member States into euro countries and non-euro countries as workable. Given the very close nature of the economic links between all the EU countries, we regard a single banking supervisory authority as essential. For this reason, the European Parliament is insisting on the involvement of all the EU Member States which have not yet joined the eurozone, but which are bound by the Treaty to introduce the common currency.

Secondly, the future role of the ECB as a banking supervisory authority must be kept strictly separate from its role as a central bank. In its supervisory role – and I have already discussed this point in detail with its President, Mario Draghi – the ECB must be accountable to the European Parliament.

Thirdly, the paper drawn up by the 4+1 Group refers to the long-term objective of a eurozone budget. If this is intended to be an instrument to stabilise the eurozone, in the same way as a debt redemption fund, eurobonds or a banking licence for the ESM, then it would indeed be a welcome step. However, it must not lead to the creation of a budget parallel to the EU budget itself. The unity of the EU budget must be maintained."

He went on to talk about the process of regulating the financial markets:

In the Thyssen report the European Parliament is calling for bodies and individuals such as the Troika, the Chair of the ESM and the head of the ECB's banking supervisory branch to be required to come to Parliament regularly and answer questions. If the Commissioner for Economic and Monetary Affairs is given more powers, then he too must be made more accountable to the European Parliament.

The first pressing task must be to sever the insidious link between speculation and rising interest rates for the refinancing of government debt. At present, efforts to cut spending are often immediately cancelled out by exorbitant increases in interest rates... With a view to breaking this vicious circle, a majority of Members of the European Parliament have called for the introduction of eurobonds and a debt redemption fund. Following the European Council's failure to reach agreement on a political solution, in the European Parliament's view the Head of the ECB, Mario Draghi, took the sensible, and right, decision - at the last minute, thankfully before it was too late - by announcing the bank's intention, subject to stringent conditions, of buying unlimited volumes of government bonds.

Today, having the courage to renew our commitment to the European unification process also means establishing, once and for all, the primacy of politics over the markets. If a repeat of the current crisis is to be prevented, all financial actors, all financial products and all financial markets must be subject to supervision and proper rules.

After initial successes, such as the ban on naked short selling, the process of regulating the financial markets has got bogged down. At present the Council is blocking the proposals on the capping of bonuses, even though it is generally accepted that exorbitant bonuses encourage highly speculative behaviour and helped to fuel the current crisis. At the G20 Summit in London a decision was taken to abolish tax havens. The era of banking secrecy was over, it was claimed. However, the report by our colleague Philippe Lamberts on private equity is now stuck in the Council because no agreement can be reached on the precise definition of 'tax haven'. Consideration of the report on the savings tax directive has also come to a standstill.

The key to effective financial market regulation, of course, are measures which at long last make the financial markets completely transparent. This is an objective which is still some way off. The European Parliament wants to ban high-frequency trading, restrict speculation involving commodities, abolish dark pools and ensure that injections of liquidity benefit the real economy and are not simply misused by speculators to maximise their profits.

I should like to propose to you once again, on behalf of the European Parliament, that we should endeavour to reach a fair outcome in the areas of growth policy, the budget, and the Two-Pack, by the end of this year. We will continue our ambitious and urgent efforts to regulate the financial markets, banks and insurance companies, and we call on the Commission to put forward any proposals which are still lacking and on the Council to keep its word. We, the Members of the European Parliament, are prepared to do whatever is necessary. 

Full speech

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