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EU ECONOMIC POLICY IN 2016. AN INCOMPLETE EMU: TOWARDS A FISCAL UNION
45
In any case, there have been signs in 2016
that lead us to believe the asymmetries and
shortfalls of EU economic policy in a general
sense and regarding the eurozone in particular
are being corrected albeit in a curious patch-
work fashion.
Against all odds, great strides are being
made towards aspects of European integration.
European citizens appear to be unaware of
these advances, which have great social or po-
litical impact, although they do react swiftly, if
superficially, to issues linked to the north-south
debate. It would thus appear that the public ei-
ther doesn’t want to see or doesn’t understand
the profundity and irreversibility of important
changes taking place.
A case in point is the ECB’s implementation
of quantitative easing (QE) during 2016, the
first full twelve-month period during which it
pursued this policy. This was an unequivocal ex-
ercise in the communitisation of public and pri-
vate debt. Many experts believe that had it not
been for the creation of the banking union,
which handles the supervision, resolution, and
liquidation of banks and credit institutions with-
in the eurozone, QE would never have taken
place. As previously mentioned, all other things
being equal, without QE it would have been im-
possible to expect the slightest hint of growth
anywhere in the eurozone today given the cur-
rent economic climate.
Banking union is slowly but surely taking shape
One of the tools in the current arsenal of the
banking union is the Single Resolution Mecha-
nism, a system by which the ECB and the na-
tional supervisory authorities of participating
countries jointly supervision the activity of all
the major banks in the eurozone. The Single
Resolution Fund, which was established to fi-
nance the restructuring of failing credit institu-
tions and thus mitigate the consequences of po-
tential banking crises, is another key element of
fiscal integration
.
Although the resources at its
disposal are limited, this fund represents an im-
portant first step in the mutualisation of debt risk.
The banking union nevertheless continues to
lack a common deposit fund to ensure the pro-
tection of money deposited throughout the sys-
tem. The European Commission presented a
proposal for the creation of a European deposit
insurance scheme in November 2015 that is still
under discussion.
From a political perspective, all substantive
debate regarding banking union and fiscal un-
ion lead to a single point, which is the assump-
tion that the construction of a monetary union-
backed banking union inevitably hinges on the
creation of a European financial instrument of
last resort.
The European Stability Mechanism (ESM)
created in 2012, through which disbursements
related to various European bailout operations
have been channelled, could in fact be consid-
ered the de facto embryo of a future last resort
scheme allowing for the mutualisation of risk
and debt in the eurozone in response to unfore-
seen problems of a fiscal or financial nature.
This idea is not particularly revolutionary, having
been mentioned as far back as the Five Presi-
dent’s Report
3
released in the summer of 2015.
However, as a practical means of getting around
a range of problems blocking its initial formula-
tion – which included impediments to the bail-
3
Juncker, J. C.; Tusk, D.; Dijsselbloem, J.; Draghi, M., and
Schulz, M.:
Completing Europe’s Economic and Monetary
Union, report prepared by Jean-Claude Juncker in close
cooperation with Donald Tusk, Jeroen Dijsselbloem, Mario
Draghi and Martin Schulz
, Brussels, 22 June 2015.