Capital won European single market


If money is a commodity, as postulates (never say it) the economic mainstream of our time, then it seems quite logical that it is treated as all other goods.

If moving money is a service, as implied by the frantic liberalization of capital movements in fashion for three decades in our country, then it is only logical that those who manage financial services is treated as everyone else.

Why wonder, then, if in the debate, so far restricted, on the future of the European Union now we draw to the necessary conclusions? Even the Capital have to enter into the general rules of European market for other goods and services, which sees the European Commission, and not nation-states, in the role of housekeeper also able to impose penalties.

Nobody can do anything if the European Commission penalizes a state that may not comply with the directive on milk quotas. Why should it seem strange if the EU Commission have the power to decide to derail a bank?

This is the exact point at which we find ourselves. The European Union is facing a critical crossroads in its development: the definitive integration, in the future, whether fiscal, or the final disintegration.

The best litmus test that we have to monitor this process is the debate on the Banking Union, which we have already seen brings some significant implications .

Now we can take a step forward. We can read for example the enlightening words of Yves Mersch, a member of the board of the ECB, who recently spoke at the European Forum Alpbach on the theme “The single market and the banking union.”

It may seem strange that there is a link between the European single market, which we know now for over 50 years, and the Banking Union. The latter has become topical only in consequence of the crisis, while the European single Market is now peacefully acquired.

But we have to remember that the expert who spoke for the first time about Banking Union was Wim Duisenberg, former ECB president and member of the Delors Committee, which set the rules of the Maastricht Treaty. But his pleas fell on deaf ears.

At the time, like today, nation-states were a little reluctant to cede sovereignty over such a delicate subject.

Today, however the days seem more propitious.

The crisis caused by the earthquake, which shook up the European economies, has made national states more willing to listen central bankers’s advices, who are called to “do whatever is necessary” to save the euro and consequently the construction of Europe.

This is demonstrated by the fact that the Banking Union entered by force in the chronicles, although the debate is still far from the ears of the general public.

But the public will always too late at stake. Today European public debate are the euro, while the International central bankers have already gone over.

Is preparing to launch the euro 2.0 .

The month of September will be crucial to understand how this is concrete crafting.

In September, in fact, the plenary session of the European Parliament is expected to approve the Regulation establishing european banking supervision, what is referred to by the acronym SSM. If Parliament will give its go-ahead, it will take at least one semester before the bureaucracy to take its course, calculate Mersch, and at least another year because supervision really become operational.

We arrive therefore at the beginning of 2015, when we should have a fully active European Supervisor.

But time will not be spent in vain. You will remember that before the summer, the European Council has found the agreement on the Directive on the bank and that the European Commission has already drafted a proposal for implementation that did turn up their nose to some states, led by Germany, because formally judged in contrast with the Treaties, but substantially skewed towards the supranational authorities.

Evidently, the states do not have problems to delegate to the Committee the rules for baking pizza or salmon fishing, contrary to what happens for the management of banks. Even politicians must have realized that if they lose the ability to rely on banks residing in their states, their power will be reduced to the equivalent of a building administrator.

The agreement reached in the European Council, which gave rise to the Bank Recovery and Resolution Directive (BRRD) must in turn be ratified by the European Parliament. The hope of our central banker is that we arrive in January 2018 (“Too late” says Mersch) with the mechanism of the bail-in (ie the responsibility of bank failures in the first instance by the shareholders and bondholders) fully operational.

This will make another operating mechanism, that of resolution. So an entity should be created, yet no one knows who composed, which has the power to derail a bank in an orderly manner if the Supervisor’s reports suggest it.

On the physiognomy of this entity is played another important game that will affect the fate of Europe. It will be a supranational entity, as suggested by the central bankers and by the EU Commission, or will be “watered down” by nation states as they would like the Germans and the French?

To understand why the banking union will decide the future of Europe just read Mersch. With the Union Bank, he explains, you get three results:

1) it encourages the integration of cross-border European banks, and then create a European banking system which, he explains, would facilitate the issuance of credit;

2) would increase the confidence in European banks, supervised by the ECB and “punished” by the Solver when they are wrong. This would improve the exchange of assets within the eurozone;

3) it would break the link between sovereign states and national banks, given the tendency of the latter to fill bonds of your country of residence, perhaps with the money from the ECB.

For the record, this link between states and banks is the “bete noire” of all European central bankers.

But the ultimate goal of the project is even more ambitious.

With the construction of an appropriate union bank, more supranational possible, we arrive to the result, truly historic: build a single market for capital. That is the natural progression and completion of the European Single Market was born in the 50s.

“We have a single market for goods and services, where the rules are laid down by Community legislation which has several tools, such as the infringement procedure, to enforce its decisions,” says Mersch.

Now need a step further: “We need to build a system as effective for the single market of the capital. We already have some new rules in place, for example on capital requirements. We are on the verge of accepting a new mechanism for supervision. But now we have to make sure to create a strong settlement authority who has the proper tools to do his job, as the bail-in, as early as 2015. ”

In practice, a new European Union that integrates under the aegis of a protective and reassuring opaque bureaucracy and democratically irresponsible everything you can exchange, money included.

The monetary hegemony’s triumph .

Our entire economy will be finally freed from politics and from its mistakes and will be totally financial, with the goods at the mercy of the stock exchanges.

The best world possible, it seems.

All this in the name of future benefits for the citizen, “who will have a banking sector safer,” the banks, “who will act in a more orderly,” and governments “that no longer have to worry about saving the banks with public money. ”

So security, public order and thrift.

This is the value proposition implicit in the economic project of EU.

Do we like?

So let’s central bankers, and others looking after them, the car keys of the economy, as we do in Italy for twenty years, and they will make sure to drive it.

Here’s how the logic of money as a commodity leads to the domination of capital on goods.

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