December 6, 2012
Or was it the Van Rompuy report…looking at the report on moving “Towards a genuine economic and monetary union” released earlier today its hard to judge how closely involved the other Presidents were, notably ECB President Mario Draghi and Commission President Jose Manuel Barroso.
So to recap, this was meant to be a report reflecting the views of the EU’s four Presidents (in addition to the three already mentioned, also Jean-Claude Juncker, the outgoing head of the Eurogroup).
First, we’ve spotted a couple of areas of confusion between what European Council President Herman van Rompuy and Draghi have been saying.
The report suggests that,
“The ECB has confirmed that it will establish organisational arrangements guaranteeing a clear separation of its supervisory functions from monetary policy.”
However in his monthly press conference today, when pushed on the ECB’s view on the single supervisor Draghi stressed that the ECB is a “passive actor” in all of this and was not involved in designing the legal structure of the new supervisor. Clearly these two views are directly at odds, which fails to fill us with confidence that the new tasks of the ECB will be combined with its current ones in a legally sound and practical way. A concern which has previously been voiced by ourselves and many others.
Draghi was also at pains to stress that the link between sovereigns and banks can only be broken when the banking union is complete, i.e. with a common resolution mechanism. The report argues that the set up of the single supervisory mechanism (SSM) will play an important role in “contributing to breaking the link between sovereigns and banks”. Not necessarily directly at odds, but it again peaks concerns that the Council plans for banking union over-estimate the impact of the SSM.
Additionally, as the FT’s Brussels Blog notes, Van Rompuy also disagrees with European Commission President Jose Manuel Barroso on the issue of debt mutualisation, with the latter favouring eurobonds.
We at least can’t blame Draghi for struggling to find the time to help write the report while also running a giant institution. But if the supposed authors can’t agree on the logistics it doesn’t bode well for next weeks EU summit…