German economist group attacks European banking union
A group of professors in Germany has filed a complaint against the EU’s new banking supervisory mechanism before the German constitutional court, claiming the European banking union has no legal basis in the EU treaties. EurActiv Germany reports.
European banking union constitutes a violation of fundamental rights, said professor of finance and economic policy at the Technische Universität Berlin Markus C. Kerber, in a statement for the German newspaper "Welt am Sonntag".
The rules for the new single supervisory mechanism "represent the first step towards unprecedented German taxpayer liability for banks outside national banking supervision", Kerber said. According to the economic law expert, European banking supervision can only be introduced if changes are made to the EU treaties.
Kerber is not alone. He stands alongside numerous critics from the Europolis Group who are convinced that the German government and Bundestag have disregarded the responsibility for integration while dealing with Brussels' plans for a banking union.
The group has decided to lodge a complaint before Germany's constitutional court against the underlying legal regulation as well as the law ratifying the transfer of bank supervision to the European Central Bank (ECB).
Announcing the group's decision on Sunday (27 July) in Berlin, Kerber also accused German Finance Minister Wolfgang Schäuble of deceiving the public regarding the risks of banking union.
The complainants announced their intention to extend the constitutional complaint as soon as the regulation on the Single Resolution Mechanism (SRM) and its corresponding bank resolution fund take effect.
Starting in November, the new single supervisory mechanism will fall within the remit of the European Central Bank (ECB). It is a central component of banking union.
“We consider the banking union constitutional,” the German Finance Ministry explained, adding its legal basis was thoroughly assessed with the constitutional department.
The ministry said Germany did not feel the EU Treaty's internal market article [Article 127(6) TFEU], on its own, was sufficient for the union, as the Commission proposed. As a result, an additional agreement was made among the member states.
Kerber has been a strict opponent of EU bailout policy from the start. "The worst is yet to come", he warned in May 2012, predicting an imminent collapse of the eurozone. At the time, he called for the introduction of second currency in parallel to the euro called the "Guldenmark".
In March 2014, the German constitutional court finally gave the green light to the euro area bailout package, rejecting numerous complaints against the European Stability Mechanism (ESM). Kerber was among the official complainants at the time.
At a summit in October 2012, EU leaders agreed plans to complete the European banking union by January 2014, after the general elections in Germany.
The concession was made to German Chancellor Angela Merkel who argued for "quality" over "speed" in putting in place the new supervisory system, seen as a cornerstone of the EU's efforts to end the eurozone' sovereign debt crisis.
Now, the European Central Bank (ECB) is preparing to take on new banking supervision tasks as part of a Single Supervisory Mechanism (SSM).
The Single Supervisory Mechanism will create a new system of financial supervision comprising the ECB and the national competent authorities of participating EU countries. Among these EU countries are those whose currency is the euro and those whose currency is not the euro but who have decided to enter into close cooperation with the Single Supervisory Mechanism.