MEPs on Wednesday January 16 set out their priorities for the European Central Bank’s actions in the coming year and those for moving ahead with completing the banking union.
In two separate resolutions, the first on the work of the European Central Bank (ECB) drafted by Gabriel Mato (EPP, ES) adopted by 500 votes in favour, 115 against and 19 abstentions, and the second drafted by Nils Torvalds (ALDE, FI) on progress made and to be made in the area of banking union, adopted by 497 votes in favour, 125 against and 14 abstentions, MEPs outlined their concerns and which elements needed to be particularly attended to over the coming year.
Actions for the ECB
MEPs agreed with the ECB’s plan to gradually begin cutting down its exceptional monetary measures, which it rolled out at the height of the financial crisis, but called for caution at the speed with which this pull-back is carried out.
They also asked the ECB to pay particular attention to growing concerns regarding a resurgence of real estate bubbles and private sector debt, the need to continue encouraging public and private investment, and to ensure that the ‘cheap’ money it is providing to banks is indeed being passed on as loans to the real economy. With an eye on Brexit, MEPs encouraged the ECB to ensure the stability of EU financial markets, including in the case of a no-deal Brexit. Finally, MEPs also asked the ECB to keep a close eye on developments in the field of blockchain and fintech.
Moving ahead with banking union
MEPs noted the need for more harmonisation when a bank is being assessed on whether it is failing or likely to fail, as well as a clearer distinction between supervisory powers and early intervention powers. They also expressed serious concerns about the poor state of anti-money laundering rules in the banking union (para 9) and called for a more unified approach in supervising compliance with anti-money laundering rules. MEPs said that the Commission must take action to reduce the shadow banking sector, which represented a concerning 40% of the EU financial system in 2017.
MEPs maintained their calls for reaching a deal on a system to guarantee bank deposits at European level, a milestone, they said, which was essential to complete the banking union.