EU Ministers agree on framework to create New World Order Bank

By LUIS MIRANDA | THE REAL AGENDA | DECEMBER 13, 2012

Ministers of Economy and Finance of the European Union reached an agreement early Thursday on the  legal framework that will allow Europe to create a single banking supervisor. The pact is the first step towards joining the euro zone bank and comes hours before the EU summit on Thursday, which will  ratify the commitment. It is expected that the bank becomes operational in March 2014.

During the hours leading up to the agreement, the main hurdle was the distribution of power and scope of the supervising entity, which as explained in previous reports published during 2012, will become the economic and financial beast the bankers have always dreamed about. Germany wanted to exempt regional banks and savings banks from the control of the supervisor, while France, like Spain, defended the institution to supervise all institutions without exception.

The bank union is full of technicalities, but in reality it comes down to one detail: who has the power. Germany has convinced others that the ECB will only oversee the nationalized banks and the largest institutions; those with assets in excess of 30,000 million or 20% of GDP, about 100 entities, to leave others in the hands of national supervisors.

Although initially it was thought that the supervisor could only have the power to control, at any given time, any entity in difficulty, Germany blocked that option, leaving out of the ECB’s orbit Länder banks, which are supposedly loaded up with toxic assets. These banks will remain under the supervision of the German Bundesbank.

Germany also imposes a watered down solution for the common guarantee fund (consisting simply of standardized national funds) and a considerable delay to the bank resolution fund (a mechanism to close banks if necessary), which at some point could be a form of mutualisation of euro problems to be done through back door deals. And almost everything else gets delayed from the original schedule, against the advice of Italy, France and especially Spain, the country most affected by the financial cliff.

The bankers are already salivating due to the agreement. “Historic agreement on the supervisor!” said the  European Commissioner for Internal Market and Financial Services, Michel Barnier, after 14 hours of meetings. In his Twitter account, Barnier judged that the creation of this entity is “a big step for a coherent supervision of all banks in the euro area.”

The objective is that the complete control of the European Central Bank (ECB) over all entities will serve to recapitalize troubled banks and break the vicious circle between the financial crisis and debt, but that kind of power will also undermine the sovereignty of the each of the member nations to a considerable degree in regards to their economic and financial policies. Everyone has seen in the last two years what happens when a complete continent is managed by a group of technocrats whose only goal is to consolidate power.

The supervising entity will be open not only to the euro zone, but all European countries that seek to yield their independence to a centralized, unaccountable banking system. So far only three countries have indicated that they are not interested in joining the single banking supervisor: the UK, Sweden and the Czech Republic.

The Cypriot Minister of Finance, Vassos Shiarly, announced at a press conference that the agreement will allow the Council to start negotiations with the European Parliament, which will begin early next week.

According Shiarly, the Twenty member states have reached an agreement on cooperation between the European Central Bank (ECB) and national regulators, the voting systems in the supervisory board of the entity and the European Banking Authority (EBA), the degree of enforceability of decisions made for countries outside the euro which are participating and the different phases of direct supervision.

Of course, it is clear that an entity that holds as much power as the supervisor will not share any kind of power to regulate how member nations direct their policies. Centralization of power and control is the reason why the bankers created this monster in the first place. From now on, it will be take it or leave it.

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European Union Sets Banking Takeover for 2013

By LUIS MIRANDA | THE REAL AGENDA | OCTOBER 19, 2012

The Heads of State and the Government of the European Union (EU) agreed Thursday to create a single banking supervisor. The entity should be ready next December and it will gradually begin its takeover of the banking system during 2013.

The EU leaders confirmed their commitment last June to create a bank union, which would work under the political framework of an agreement adopted back in late 2012. The announcement was made by EU spokesman Olivier Bailly, who posted a message on the social network Twitter.

Diplomatic sources explained that in practice this means that the complete takeover of the financial system by the European Central Bank (ECB) will only be completed in 2014.

With this agreement, the so-called European leaders solved the ‘differences’ regarding how to create and manage a banking supervisor. The disagreement between France and Germany stemmed from details related to the creation of the entity itself as well as the power it would have to manage all banking institutions in the old continent. While French president François Hollande pushed for its creation and effective activation for next January, German Chancellor Angela Merkel argued for delaying its implementation given the deterioration of her image at home and the coming German election.

Other diplomatic sources indicated that “Holland’s demands and proposals were simply unrealistic.” They added that even if the leaders reached an agreement by December, the process of creating such an entity  would not be completed before the end of the first semester of 2013, which means that the ECB would still require a minimum of 6 more months to fully implement its directives.

A few weeks ago, Merkel’s government questioned the schedule proposed by Hollande, while the president of the European Central Bank, Mario Draghi, added that the European Parliament would need a period of one year to adapt its structures to take on the task of supervising banks in the eurozone.

According to the European Commission’s plan, the centralized banking supervision mechanism will take effect in stages. The new system would only begin to be implemented on the first of January 2013 and initially affect banks that had requested or received public aid. The plan is to include all 6,000 banks that operate in the euro area.

The German delegation did not support the idea that the new supervising entity had the power to manage  all banks, especially regional banks.

Sources said that “the effective establishment of a Europe-wide monitoring system will take several months” from formal approval, as the ECB will have to hire some 1,600 “experts”, which in turn would further delay the possibility that the European Stability Mechanism (ESM) directly recapitalizes troubled banks.

France, Italy and Spain went to the summit with the intention to push for a quick implementation of the banking supervising entity as it was proposed by the ECB, while Germany, Finland, the Netherlands and Sweden advocated delaying its implementation.

Some countries that have not adopted the common currency said that the proposal issued by the EU needed changes because in its current form it creates a competitive disadvantage compared to banks in the euro zone.

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