Now Reading:

French and German finance ministers defend bank plan against criticisms


French and German finance ministers defend bank plan against criticisms


Just hours after the European Union agreed a plan for winding down and closing failing banks, the finance ministers of France and Germany had to offer reassurances that it would be sufficient.

The president of the European Parliament Martin Schulz has described it as possibly the biggest policy failure since the euro crisis erupted four years ago, but Germany’s Wolfgang Schaeuble was upbeat.

He said: “All the European banks, as we’ve been repeatedly reassured by the European Central Bank, are now much better capitalised than before. Now, we have clear bail-in rules – [with investors contributing ahead of governments] – and I think that what we are building up here is the right contribution to further stabilising financial markets.”

Schaeuble appeared at a joint news conference in Paris with his French counterpart. He was asked if the backstop that had been agreed was sufficient to assure savers and markets. Schaeuble replied: “We have reached a result which is convincing.”

French Finance Minister Pierre Moscovici said the deal would yield a credible joint backstop after a long transition period.

In the negotiations Germany blocked the hopes of France, Spain and Italy, that eurozone money would be used directly for bank clean-ups.

Still Sarah Hewin, Head of Research at Standard Chartered, said it was an achievement to get anything agreed: “Looking back, a month or so ago it seemed unlikely that they would be able to reach an agreement before the end of the year. Clearly it’s a compromise between what Germany wanted and what the European Central Bank and European Commission wanted. But overall I think we’re in a positive place here.”

But the criticisms from Schulz and others in the European Parliament include that the plan is very cumbersome and does not address the situation of weak governments being left to cope with banks, whose problems can buckle a country’s finances – as happened in Ireland and Spain.

Every story can be told in many ways: see the perspectives from Euronews journalists in our other language teams.


Next Article