Simon Jenkins (Europe is returning to national identity, 16 September) suggests that a weakening of the EU and a corresponding breakup of the eurozone is not just a possibility in the current deep political and economic crisis but is inevitable: «It [Europe] is turning back to national identity and there is nothing the EU can do to stop it.» Ignoring the likely major, devastating and global economic implications of such a breakup, Jenkins bizarrely suggests this could be David Cameron’s «historic opportunity to draft a new European dispensation».
09/9/2011
— Filed under: Politics
Tags: democratic legitimacy, economic crises, EU
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European economic policies will come under more scrutiny from this month when the European Central Bank takes the lead in a new financial police authority with whistle-blowing powers to prevent future crises.
The European systemic risk board (ESRB), chaired by Jean-Claude Trichet, ECB president, will have powers to issue warnings and recommendations when it sees threats to economies or financial systems. But it could have a tough time proving that such limited powers, wielded by European officials, can prevent financial market turmoil on the scale seen in the past three years.
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Although operating at arm’s length from the ECB — and covering the European Union, not just the 17 eurozone countries — the board’s establishment goes some way towards fulfilling the central bank’s ambition for better surveillance to avert economic traumas similar to those that have hit the continent’s 12-year-old monetary union.
The ECB has been disappointed at politicians’ progress in beefing up eurozone governance and wants greater economic surveillance of eurozone members. Vítor Constâncio, ECB vice-president who will sit on the board, told the Financial Times: «If there were serious economic imbalances in a member country we [the board] could say that something should be done about it.»
Mr Constâncio said the systemic risk board could have sounded warnings at an early stage about the problems in Greece — where loss of competitiveness led to a surging current account deficit.
«We could also have warned about housing market bubbles in Spain and Ireland — and about lending in foreign currencies in eastern Europe,» he said. «These are examples of things that the ESRB would have done to prevent crises. If a body such as the systemic risk board, with so many members, issues concrete recommendations of that sort, then something would have to happen.»
Set up as part of a European regulatory overhaul, the board will have 37 voting members, including central bank governors from the 27 EU countries, as well as Mr Trichet and Mr Constâncio and the chairmen of three new pan-European supervisory authorities covering banking, insurance and securities markets.
Mervyn King, governor of the Bank of England, will be vice-chairman.
His appointment could help avert fears in the UK that EU supervisory arrangements will hurt the City of London. Other members will be senior European experts. The 22-strong secretariat and much of the analytical research will be provided by the ECB in Frankfurt.
Just how effective the new board will be remains unclear. «They could end up warning against everything — or they could be entirely wrong sometimes,» said Karel Lanoo, chief executive of the Brussels-based Centre for European Policy Studies. Mr Lanoo expected the board to build up its role gradually. There were few precedents for creating such institutions, although US regulators are also putting more emphasis on «macroprudential» supervision — looking at dangers that affect the entire economic system, not just individual banks.
A risk for the ECB is that its close association with the new board could undermine its credibility as an institution if it cries wolf too often — or, alternatively, misses the next crisis. «They will be extremely measured in what they say because it could damage the reputation of the ECB and the euro,» said Mr Lanoo.
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12/19/2010
— Filed under: Finance,Politics
Tags: economic crises, EU
