Michel Barnier is the EU's internal market commissioner.
For over 20 years, the EU’s single market has been improving the daily lives of people across Europe. Thanks to the Single Market, a UK national is now free to live and work in any other country in the EU, and an estimated three quarters of a million UK citizens have chosen to do so. You can buy and sell goods across borders; you can offer professional services to customers in other countries, and you can transfer funds and invest all over the EU too.
This is a unique achievement of our time, one that an entire generation has now grown up with and take it for granted, and one that I am proud of, as a committed European, and as the EU’s Commissioner for the Internal Market. But there is still more we can achieve.
The economic fall-out from the banking crisis has been severe across Europe. Significant amounts of public money have had to be used to stop a systemic collapse of the banking system, worsening public finances and deepening the recession. People and businesses are still feeling its consequences. UK economic growth is limited, at only 0.6% of GDP. Over 2.5 million people are out of work and the banks are still not lending enough, particularly to small businesses.
The picture is therefore clear: to make the financial sector pay its fair share, restore confidence and put the economy on more solid footing, financial services regulation is more necessary than ever. The EU must fill the gaps in the system that allowed for the 2007-2008 failures and must combat the moral hazard that rewarded excessive risk-taking over sound economic decisions. This is not a case of Brussels vs. the City. All Europeans, including in the UK, need safe, well-capitalised, well- managed banks that can play their important role in supporting the real economy. The coherent package of measures that we have introduced in Europe in the last five years will restore stability. We all need that stability for real growth to return.
I am proud of the results we have already achieved. We created the European system of financial supervision, including three strong European authorities for the supervision of the banking, insurance and securities sectors. Banks are now required to hold more and better capital, are in a better position to manage the risks linked to their activities, and can absorb better the losses they may incur in doing business.
Bankers' bonuses will be capped as of 1 January 2014, so they will have far smaller incentives to take excessive risks. The EU has proposed to strengthen national deposit guarantee funds, to ensure they are pre-financed by banks, to protect depositors in every Member State up to EUR 100 000 and allow them to access these deposits within seven days.
New rules govern the activities of credit rating agencies, on which there had been excessive reliance in the years preceding the financial crisis. We are introducing new rules to improve the information that customers receive on the price and availability of mortgages and improve the supervision of institutions that offer them. But work continues.
We are currently finalising the creation of a banking union that will make it possible to supervise banks better and to handle banking difficulties more effectively in the euro area and in other Member States which may decide to join. The first and most notable initiative is the creation of a ‘Single Supervisory Mechanism’ (SSM) to be led by the European Central Bank (ECB). It allows for closer supervision of banks and credit institutions within the euro area.
In July, the Commission proposed to create a ‘Single Resolution Mechanism’ (SRM), which should complement the SSM by ensuring that, if a bank is in serious difficulty, its resolution can be managed efficiently with minimal costs to taxpayers and the economy.
What more could we be doing to help the EU’s banks play their part in driving economic recovery? What shouldn’t we be doing? What are the new measures you would like to see in place?
We launched on 7 October a forum for debate on new ideas for what Europe should do next at yourideasforeurope.eu. Whatever the ideas, they really could shape European policy!