Minister for Finance Prof. Edward Scicluna welcomes the agreement on an EU Single Resolution Mechanism as a “European milestone decision.”
“I am very proud to have participated in a milestone European decision which is intended to protect both bank depositors and taxpayers’ money.” Prof. Scicluna was speaking following the historic Economic and Financial Affairs Council (ECOFIN) meeting which ended just before midnight on Wednesday 18th December, 2103.
During the meeting, EU Finance Ministers reached a landmark agreement on a Council position on the establishment of the Single Resolution Mechanism (SRM) which consists of a single decision-making authority and a single fund for the resolution of failing banks.
The SRM established various protective layers and backstops in order to ensure that banks will be effectively insured against failures and contagion risks. The common resolution mechanism at a European level is intended to ensure an effective European response in cases where a bank finds itself in serious difficulty. They key principle underpinning the SRM is that costs of resolution will not come down on taxpayers through bank-bailouts.
The SRM will form one of the key elements of the EU’s Banking Union. The Banking Union is an institutional and regulatory framework which involves the setting up of three pillars (which include the SRM) aimed at establishing a robust and resilient EU banking sector. Through these pillars, the Banking Union will strengthen the banks in EU Member States through rigorous monitoring, stress-testing and tight supervision both at country and European levels.
An Inter-Governmental Agreement will now be negotiated between Member States on the functioning of the Single Resolution Fund.
Minister Scicluna expressed his satisfaction that all Member States – both inside and outside the Eurozone – agreed to this historic step forward in European coordination towards overcoming market fragmentation and injecting international confidence in the resilience of the EU’s financial sector.
The Council will now begin negotiations with the European Parliament which adopted its own negotiating position on the SRM on 17 December 2013. The goal is to conclude these negotiations by the end of the European Parliament’s current legislature (May 2014) and have the SRM enter into force on 1 January 2015.
During the meeting, Minister Edward Scicluna was accompanied by Malta’s Permanent Representative to the European Union, Ambassador Marlene Bonnici, and the Permanent Secretary in the Ministry for Finance, Mr. Alfred Camilleri.
