REFORM OF THE BANKING UNION, ECB AND BAIL-IN, THE 11 PROPOSALS OF THE CNEL
"The European Union should re-think the bail-in, the application of which has raised many perplexities, and complete the structural reform of the ECB, which must become the last resort lender bank to insure the public debt of each member country, to convince the markets of their solvency and defend them from speculative maneuvers”.
This is what the CNEL writes in a document of observations and proposals on "The process of integration of the European banking union" approved by the Assembly and shared by the social partners and the productive forces, containing "11 well-defined proposals on the reform of the European banking system, the role of the central bank and the bail-in, with a view to recovering the climate of trust between Member States”.
The CNEL and the 38 social forces represented in the “Parlamentino”, also in the light of the Italian cases and the latest judgments on the matter, ask our Country to take a defined position in Europe: "We need to overcome a model based exclusively on proposing structural reforms based on austerity and which mainly affect the weakest sections of society. To actively contribute to the development of the Union and trigger adequate stimuli for the economy, monetary policy should be coordinated with fiscal policy through 'federal' operations, in order to prevent the increase in the rates on sovereign bonds of riskier countries ", as stated in point 11 of the document.
“It is necessary to provide for procedures for compensation of pecuniary damage caused to blameless savers through a more rapid final judicial verification of the responsibilities. The framework for more effective containment of the risks of contagion and losses within the economic system does not sufficiently take into account the size of the banking company and specific mechanisms for smaller banks are lacking”.
With specific regard to the Italian case, “The CNEL considers unacceptable a transfer of the burden of the crises onto the tax payers, in consideration of the questionable level of equity of our tax system and the margins of evasion and avoidance that it allows - it is also written in the text - The Government has included in its agenda the revision of the European resolution system and crisis management mechanisms, with particular reference to the bail-in, with the intention of contributing to the ongoing discussion on completing the banking union and strengthening the monetary union as well as identifying a solution that would reconcile the need to combat moral hazard practices linked to bail-out expectations with the need to contain the risks of financial and banking instability”.
THE 11 PROPOSALS
1. The bail-in has shown a negative impact on the banking system in terms of the confidence of families and businesses. It is essential to identify the types of financial assets that can be subjected and in any case ought to cancel their retroactivity, providing that the resolution procedure applies only to securities issued starting from 2016.
2. The type of measures that can be activated in the presence of a crisis need to be expanded and the possibility of preventivate and precautionary intervention by the interbank deposit protection fund restored.
3. It is necessary to provide for methods of compensation for pecuniary damage caused to blameless savers through a more rapid final judicial assessment of the liabilities.
4. Massive initiatives must be launched quickly, also for preventivate purposes, designed specifically to promote financial education, not only at school level, but also outside and towards the civil society, so called mature or "third age”.
5. With regard to the supervisory and resolution mechanisms, the CNEL urges the introduction of a principle of proportionality relating to the size and relevance of the intermediary, both for the resolution and for the purposes of bureaucratic-administrative compliance.
6. It is necessary to identify procedures aimed at harmonizing at the European level the criteria of bankruptcy hierarchy, while at the national level it is necessary to make the judicial and extrajudicial procedures more streamlined and effective, so as to reduce the vulnerability of Italian banks in terms of non-performing loans.
7. It is essential to introduce adequate tools to assess the impact of banking crisis management on employment levels and to ensure an adequate system strategy to protect savings.
8. A strong action is urgently needed to combat moral hazard behavior, strengthening the implementation of the European Mifid II directive on transparency.
9. The discussion on the introduction of a clear separation of the rules of the commercial bank from that of the investment bank cannot be postponed. At the same time, a correct analysis of the costs/benefits of such a separation should also be initiated, especially in view of the new technological and digital challenges of Fintech.
10. It is appropriate to overcome the current European treaties and therefore complete the current attributions of the ECB - to which the CNEL firstly recognizes the positive role played in the monetary policy of recent years - as a "last resort lender" to convince the markets of the solvency of national public debts and defuse any speculative operations.
11. It is necessary to overcome a model based exclusively on the proposition of structural reforms marked by austerity and which mainly affect the weakest sections of society. In order to actively contribute to the development of the Union and trigger appropriate stimuli for the economy, monetary policy should be coordinated with fiscal policy through "federal" operations, in order to prevent the increase in sovereign debt rates of riskier countries.