Council agreement on single resolution mechanism expected by the end of the year
On 15 November the EU finance ministers discussed outstanding questions relating to the creation of the single resolution mechanism.
All key elements of the Commission proposal – such as the scope of the SRM, the funding principles and financing arrangements for the Single Resolution Fund, and the governance structure (decision-making and voting mechanisms) – are still under discussion as outstanding issues.
Rimantas Šadžius, Lithuanian Finance Minister and Chair of the ECOFIN Council, confirmed that all member states are willing to find an agreement on the draft regulation by the end of the year.
The agreement – known as the Council's general approach – would be the Presidency's mandate to start negotiations with the European Parliament, which would lead to the final adoption of the regulation.
The Presidency therefore mandated the Council's working group to continue negotiations on the remaining issues.
The regulation will be discussed again at the upcoming ECOFIN Council meeting on 10 December.
Single Resolution Mechanism at a glance
The proposed regulation on the single resolution mechanism (SRM) aims to help struggling credit institutions to recover from any shocks in an orderly manner and minimising the possibility of losses to the taxpayer. The overall aim is to ensure stability in the EU's financial sector.
The SRM is one of the main elements of the EU's planned banking union.
The Commission proposed that the SRM would consist of a single resolution board (a single decision-making body, which would prepare resolution cases) and the single resolution fund.
According to the proposal, the Commission would be entrusted with taking formal decisions to place a bank in resolution and would decide on the framework for the use of the resolution tools and the fund.
This Regulation would apply to credit institutions in the euro area and in those EU countries that choose to participate. It is expected to enter into force on 1 January 2015.
Other main items on the agenda
– Banking union
The ministers were updated by the ECB (European Central Bank) on the implementation of the recently adopted single supervisory mechanism (SSM).
They also adopted the Council's statement on EU banks' asset quality reviews and stress tests, including on backstop arrangements.
– EU statistics
The ministers adopted conclusions on EU statistics. This forms part of an annual review of statistical governance in the Union.
– Standard VAT return
The Commission presented its proposal to introduce a standard VAT return valid throughout the EU. This would help reduce the administrative burden on businesses, and in particular small and medium-sized enterprises.
– Prevention of money laundering
The ministers discussed progress on the draft directive on the prevention of money laundering and terrorist financing. The aim of the draft directive is to ensure consistency between the EU anti-money laundering rules and the international approach in this area.
– Taxation of savings income
The ministers discussed a proposal to strengthen EU rules on the taxation of savings income. The proposal aims to enlarge the scope of the current directive, so that it includes all types of savings income and products that generate interest or equivalent income. The purpose is to prevent tax avoidance.