Economic and Financial Affairs Council, 18 February 2014

Single resolution mechanism: Council reviews the state of play of the negotiations

The EU finance ministers on 18 February discussed the possible adjustments to the Council's general approach reached in December 2013 on the single resolution mechanism.

The discussion was held with a view to giving more flexibility to the presidency in the forthcoming "trilogue" negotiations with the European Parliament on the establishment of the single resolution mechanism (SRM) - one of the key elements of Europe's future banking union.

While not diverging from the key elements of the general approach, the ministers recognised the need to give the presidency some flexibility to explore various ideas in order to identify possible options that might lead to an agreement.

The presidency summarised the scope of such ideas as follows:

• the framing of the role of the plenary session of the single resolution board (SRB);
• a review of the thresholds for the involvement of the plenary, and of voting arrangements, especially during the initial transitional phase of the single resolution fund (SRF), to create a balanced solution for the use of the SRF;a possible better framing of the Council's role in order to limit its discretion and the grounds on which it can raise objections to the SRB's decisions, as well as a simplification and, if possible, shortening of the decision-making process;
• a more closely regulated oversight of the SRB over national resolution authorities;
• a central role for the European Central Bank in determining whether a banking institution is failing or likely to fail, while the SRB should ultimately maintain a possibility to effectively influence that decision too;
• agreement that bail-in and not bail-out is the main guiding principle for bank resolution.

The Council remains committed to reaching an agreement acceptable to all parties within the deadline set by the European Council, enabling the Parliament to vote on it before the end of its current legislature in April.

The presidency noted that the outcome of the trilogue negotiations would be the result of a comprehensive deal covering discussions on both the single resolution mechanism (SRM) regulation and the intergovernmental agreement (IGA).

Intergovernmental agreement on the single resolution fund

According to the December general approach, the arrangements relating to the functioning of the single resolution fund should be governed by an intergovernmental agreement (IGA) rather than the SRM regulation. The ministers reviewed the main open issues on the intergovernmental agreement in a special meeting on the 17 February 2013.

Other main items on the agenda

Deposit guarantee schemes

The ministers confirmed an agreement with the European Parliament on a recast of rules on deposit guarantee schemes (DGSs). Maintaining a coverage level of €100 000 per deposit, the draft directive harmonises the framework for DGSs across the EU and enhances depositor protection, simplifying in particular coverage and pay-out arrangements. 

Single euro payments area (SEPA): postponement of the deadline

The Council postponed to 1 August 2014 the end-date for migration to credit transfers and direct debits based on SEPA (single euro payments area) standards. This will enable an exceptional and temporary extension of the use of existing standards, alongside SEPA schemes, so as to enable the rate of migration to be raised to the required level.

Guidelines for EU budget of 2015

The Council adopted conclusions that set out priorities for the negotiations on the EU's general budget for 2015. The Council also adopted a recommendation to the European Parliament on the discharge to be given for implementation of the EU's general budget for 2012. 

Annual growth survey for 2014

The Council adopted conclusions on the Commission's annual growth survey, agreeing that the broad priorities outlined for 2014 are the same as those identified last year. It noted that despite recent improvements, the recovery remains fragile whereas the legacy of the crisis, high unemployment and persisting fragmentation in the financial industry are likely to continue to weigh on economic growth.

Alert mechanism report for 2014

The Council adopted conclusions on the Commission's alert mechanism report for 2014. The ministers welcomed progress made by member states in correcting both external and internal imbalances. Further progress is however needed to address imbalances that give rise to sustainability concerns, and the Commission is expected to publish in-depth reviews of the situation in 16 member states. 

Single supervisory mechanism

The Council took note of the presentation by the European Central Bank of its first quarterly report on implementation of the single supervisory mechanism for banks.