Addressing the incoming rotating President of the Council, Irish Taioseach Enda Kenny in Strasbourg today and in the presence of the president of the European Commission José Manuel Barroso, Guy Verhofstadt strongly criticized the first Commission draft on banking resolution as reported in the media.
“We all agree that without a serious banking resolution mechanism there is no real banking union.”
“But the first draft from the Commission, as reported in the media, is not what we need. Following an ESM intervention, Member States would still have to pay the money back which means there is no effective break between the sovereign debt and the banks. What is needed is a common European system, as the Irish know all too well.”
“Such a mechanism could kick in when the rescue amounts exceed 10% of a Member’s GDP or if public finances are in jeopardy. Had this been in place, Ireland’s public debt would not have tripled and there would have been no need for an EU/IMF bailout.”
“In the long run such a system must not be funded by the tax payers, but by the creditors and the financial institutions in relation to the risk they represent.”