Plans for a European banking union have been a long time
in the making. Since 2012, the EU has been in conversation with
member states to strengthen the bloc against economic shocks.
These conversations have intensified over the last few weeks
but Germany's acting finance minister Peter Altmaier said that
clarifications on risk sharing and reduction need to be made in
order to proceed to the next stage.
The talks come at a critical point in the EU's lifecycle.
Brexit, rather than destabilising the union and its member
states, seems to have strengthened them. Despite fears that the
UK's exit would put the EU on life support, French and German
leaders Emmanuel Macron and Angela Merkel have pushed ahead
with plans to increase coordination now that its long-standing
roadblock to further cohesion has been removed.
Positive economic figures will help their cause: the GDP of
the eurozone grew by 2.5%, which is the highest level since
2007 and public opinion is favourable. In a September, 70% of
the bloc said they would vote to stay in the EU if presented
with the option. Brexit has not destabilised the EU as many
people once feared.
But even more crucial is the German election that could
easily derail any prospects of further harmonisation.
Europhiles will be pleased that a breakthrough in coalition
talks with Merkel's Christian Social Union and the Social
Democrats has been made that avoids the nightmare scenario of
the far-right eurosceptic Alternative for Germany gaining
decision-making power inside the Bundestag. Sighs of
relief can be heard from all over Brussels.
This feels like a point at which the EU has reached a
crossroads and the UK's exit should lead to the end of what has
been termed Europe à la carte. Yet inevitably
some nations are not as enamoured with a banking union as
Germany and France have historically been. Poland has been a
vocal critic of the proposal while Austria is unlikely to
accept it. Italy is expected to rock rightwards in their
upcoming election and this could have potentially severe
repercussions for the bloc given that it is now the EU's third
But as Brexit has showed, kowtowing to the demands of
eurosceptics does little to improve EU support.
Some have suggested a two-tier system to keep the EU27
together, with some member states having full membership inside
a union and others remaining as they are. But this solution
would be only a sticking plaster to the EU's long-standing
problem. The 2012 crisis showed that the EU cannot go through a
crisis unscathed without having some kind of fiscal
harmonisation and centralised banking sector policies to
complement the monetary union.
With Britain out of the picture, the EU now has the
opportunity to build an economic framework that is fully
resilient to economic shocks. It's their move.