Banking union key to future Eurozone success – Donohoe

17th May, 2013


Speaking at a European Presidency conference on Monetary Union and Democratic Legitimacy in Madrid today (Friday), Fine Gael Dublin Central Deputy, Paschal Donohoe, said that for future European success we must deliver a viable and robust banking union that has the faith of the people at its very core (see full speech below).

“At the heart of our economic crisis was a loss of faith by investors and companies in their commitments; banks in other banks who feared they might not get their money back; investors who doubted the quality of the assets underpinning loans; and purchasers of sovereign debt who feared the consequences of default and loss of their money.

“To ensure the future success of Europe, we have to do away with the concept that banks live globally and die locally. A robust banking union is key to securing Europe’s future and is the missing link between monetary union and a successful economic union.

“This union must address the issues of banking resolution and regulation but also the equal supply of credit across the Eurozone. This is pivotal for bolstering confidence and ensuring people feel that banks and their collapse are not capable of bringing down an entire country.

The Pew Research Institute has recently concluded that across their eight polled countries the median level of support for the EU has fallen from 60% in 2012 to 45% now, with the trends of support differing widely between northern and southern states. It appears that just as credit has ceased to flow, political faith has begun to ebb. This has contributed to a rise in popularity of political parties such as the French National Front, the Five Star Movement in Italy and UKIP.

“However, Eurobarometer polling also shows that within Eurozone Member States, 66% of citizens continue to support the euro and the goal of European monetary union. So while reserves of support still exist for the European economic project the levels of support vary dramatically by socio-economic group. Recession, bailouts, bank crises and chronic levels of unemployment are all facets of the vast crisis facing the European project.

“While the existential threat of euro break up has thankfully receded, the massive challenges facing struggling European families have not. To ensure that our collective past of stability, prosperity and integration based on consent and hope is a bedrock for a better future and not a fierce and bitter reminder of lost opportunities, we need to work hard to resolve outstanding issues, starting with a solid and sustainable banking union.”