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THE FINANCIAL SYSTEM OF THE EUROPEAN UNION
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related to payment accounts, payment account
switching and access to payment accounts with
basic features.
At the same time, the European financial
system has to be stable and contribute to the
growth of per capita income and employment.
This requires strict regulation of the banks to
reduce speculation and minimise the systemic
risk, which is under way. Nevertheless, there are
still some loose ends, such as the separation of
the activity of negotiating loans to consumers
and companies. The proposed regulation on the
structural reform of the banks, which is cur-
rently going through the European Parliament,
is perhaps the most important piece of legisla-
tion on financial matters of this parliamentary
term. It is important that the separation takes
place in an objective manner above a certain
threshold, measured by the ratio of loans to the
real economy to the credit portfolio as a whole.
A stable financial system is achieved by re-
ducing the number of institutions that are too
big or too interconnected to fail. This requires,
on the one hand, legislation that enables a pos-
sible orderly liquidation while ensuring protec-
tion for depositors, but also a robust competi-
tion policy that reduces the oligopolistic nature
of the banking sector.
In short, the financial system remains an eco-
nomic service in the general interest, compara-
ble to sectors such as electricity or water, and
therefore must be regulated as such. This means
a high degree not only of regulation and super-
vision but also of intervention, through the pres-
ence of the public development banks, includ-
ing the EIB and, possibly, the EFSI, if it is finally
given legal status providing it with the capacity
to issue debt and reinvest profits, thus becom-
ing the EU’s permanent anti-cyclical policy in-
strument. In this respect, the EFSI regulations,
which are currently under discussion, would
have to include obligatory national contribu-
tions, which are not prohibited by the Treaty on
the Functioning of the European Union.
The intervention could also come in the
shape of either establishing targets of loans to
the real economy for private financial institu-
tions or public participation in their share own-
ership in order to guarantee the economic and
social usefulness of the credit portfolio.
Lastly, the EU must issue public debt in euros
to increase the stability and liquidity of the euro
zone. This requires the repeal of Article 17.2 of
Regulation 976/2012.