Draghi sceptical on German bank union plan - Benjamin Fox ->
The new rule-book should have “a single system, a single authority and a single fund,” said Draghi, adding that he was “concerned that the decision making procedures may become overly complex”.
“Everybody knows that these decisions must be taken instantly…we can’t have hundreds of people debating whether a bank is viable or not,” he told MEPs.
EU finance ministers will gather in Brussels this week in a bid to thrash out an agreement on a common resolution mechanism to wind up insolvent banks.
Governments will be required to set up bank-funded national resolution funds over a period of ten years to cover the costs of bank failure, which will eventually be worth around €60 billion. But it is unclear what should happen if a bank failure cannot be covered by the resolution fund.
there is more
Crunch time for Draghi.
His native Italian banks are insolvent (he was the ex governor of the system).
Even more so given their ramp up in Italian sovereign bond purchases.
Spain is worse and Ireland / Portugal worse again.
Without this, any reversal of buying in bonds could undo the last 18 mths.
Perhaps Draghi is going to give Angela a taste of this first …
Muddling through in Europe - Edward Harrison ->
creditwritedowns.com/2013/12 … urope.html
But, one year later, I still believe Germany concerned about its own public finances (link here). The Germans don’t like having 80% government debt to GDP and want to get that number lower. This limits their ability to act counter-cyclically on the fiscal side. Germany has instead boosted domestic demand by easing wage restraint.
Moreover, thinking in Germany is that easing up now would send the wrong signal to the periphery. The Schröder deficit breach is still rued. Even ECB head Mario Draghi has said that Germany stands as an example for the rest, echoing sentiments widely heard in German policy circles.
My conclusion then is that the heavy lifting of the eurozone adjustment process will come all on the periphery side.