Committee on Economic and Monetary Affairs Ordinary meeting
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ECON European Parliament
Follow its sittingsSimon Harris
If not now, when? Europe must do this. This is not a case of just putting on our political jerseys or our national jerseys. I'd argue it's fundamentally a piece about does Europe want to deepen its Capital Markets Unions, and if we're not going to do it now, when are we going to do it? Because the amount of potential investment flowing out of the European Union is indefensible.
It's not sustainable. And like I say, this idea did not fall from the sky. We have all committed to this through the roadmap, this institution, the Council, which I now chair ECOFIN of, and indeed the Commission as well. Equally important, Chair, is the single currency package, and I'm very happy that both institutions, Council and Parliament, share the objective of securing Europe's economic resilience when it comes to digital payments, while providing our citizens with the choice to keep using cash if they so prefer. On Monday, we held our first political trilogue, and we're resolutely committed to working with you towards reaching an agreement during our presidency.
We have other trilogue negotiations that the presidency will prioritize. It's good to see that progress is being made on the securitization review framework, where we should work towards a political agreement in the autumn.
And last but not least, we're looking forward to starting negotiations on the supplementary pension package and the sustainable finance disclosure regulation. The Irish presidency will also promote economic coordination amongst member states, and we will work on a number of tax-related priorities. We're committed to advancing the EU simplification agenda. It is among the top priorities for our presidency, and there are two aspects to this from an Ecofin perspective. Firstly, we'll prioritize the recast of the directive on administrative cooperation and the tax simplification omnibus.
As you know, the proposals were published at the end of June by the Commission. We aim to progress the omnibus, and on the recast directive, we aim to reach agreement by the end of the year. Furthermore, we aim to achieve an agreement in Council on the tobacco tax directive and progress a number of proposals related to the Union's VAT framework. The Irish presidency also stands ready to engage with the Parliament in trilogue negotiations on the carbon border adjustment mechanism. We're also committed to taking forward the work initiated by the Danish presidency to examine the economic consequences of EU legislation.
I think this is an important piece of work. We can't just keep retrofitting simplification when it comes to legislation. We need to look at the economic impact of legislation as it is initiated, and I think the Danish presidency did some very good work there that we want to build on. And last but not least, Chair, the presidency will promote timely economic governance framework implementation, including through the 2027 European Semester autumn package. We're committed to ensuring swift Council processes around the finalization of the Recovery and Resilience Facility to ensure the effective absorption of remaining funds before the year-end deadline.
So Madam Chair, honorable members, Europe is facing numerous challenges at a time that required determined and unified action from co-legislators. I want, in being here today, assure you that the Irish presidency will play our part and look forward to working with you in respectful partnership to make that progress. We're determined and committed to deliver on the targets set out in the One Europe, One Market roadmap, and throughout our term, we will rely on the constructive engagement and support from the European Parliament and other partners, and assure you of ours in return. So thank you so much for this engagement today. I welcome your views.
I look forward to that ongoing work together to deliver policy priorities over the next six months, and with that, Madam Chair, I am back.
Thank you so much, dear President. We will move to the Q&A session, and I will start with Markus Ferber for EPP.
Markus Ferber
Ja, vielen Dank, Herr Harris, wenn Sie gestatten, würde ich gerne in Deutsch sprechen. Vielen Dank. Die irische Präsidentschaft hat sich ja zum Ziel gesetzt, und Sie haben es gerade noch mal bekräftigt, noch im Oktober im Rat eine allgemeine Ausrichtung zum Marktintegrations- und Aufsichtspaket zu erreichen und die Verhandlungen als eine der zentralen SAU-Prioritäten abzuschließen. Der Zeitplan ist sehr ambitioniert. Das freut mich.
Ich hoffe, dass der sich auch bei meinen Kollegen dann widerspiegelt, dass die auch so ambitioniert mit mir verhandeln. Aber ich habe ein bisschen den Eindruck, dass jetzt aus der Ratsarbeitsgruppe Dinge durchdringen, die eher zum Ziel haben, dass man sich einigt bis Oktober, als dass was Vernünftiges rauskommt. Und das macht mir ein bisschen Sorge. Viele Mischstrukturen, die sich vor allem um mehr Komplexität, höhere Kosten sorgen, weil also dafür sorgen werden, weil scheinbar viele Mitgliedstaaten das Ziel haben, ihre nationalen Aufsichtsbehörden irgendwo noch irgendwie mit dabei zu haben. Und das ist ja eigentlich nicht das Ziel dieses Kommissionsvorschlages, sondern es sollte die Dinge ja einfacher machen und weniger komplex und weniger zeitaufwendig und hoffentlich auch weniger teuer.
Sind Sie bereit, bei den anstehenden Verhandlungen tatsächlich auf klare Zuständigkeiten zu setzen, oder nehmen Sie in Kauf, dass am Ende so ein Kompromiss gefunden wird, dass man halt einen Kompromiss hat und verhandlungsfähig ist, weil das würde die Sache dann auch im Trilog nicht erleichtern. Vielen Dank.
Simon Harris
Thank you so much, Markus, and thank you very much, Mr. Weber, for your question and indeed for your commitment to this issue. I would start by making the point that as of last Friday, the timeline to reach an agreement by October is no longer mine alone.
It is now the timeline of all 27 member states represented at ECOFIN. And I was genuinely heartened by that and encouraged by that and had many preparatory conversations with colleagues in advance of that. And the second point I would make is, and I'm not suggesting you implied this, but I do sometimes hear others imply it, I don't think we should suggest that it is a choice between speed and a good outcome. I think we have to do both. In fact, I struggle to suggest that this is speedy, considering this has been discussed for such a long period of time.
I'm of a view as a practicing politician, and maybe it's just my perspective, that sometimes we fill whatever amount of space is available to us, and that the issues, no matter how complex or difficult, and I accept some are complex and difficult, no matter how complex or difficult they are, they don't get any easier to solve in my view over an elongated timeline versus a more acute one. I'd also make the point that in my role as President of ECOFIN, my mandate is to deliver on the One Europe One Market roadmap timeline. And I can only control what is within my control, and that mandate from our leaders, from the leader of my country and from all the members of the European Council, is to get this done this year. And I'm extraordinary respect of this institution and it's not for me to comment on your work, but if I'm to do my piece and the Council is to do its piece, I believe that does require that agreement being reached in October. So we are not quite cancelling summer, but we intend to work very intensively over this summer period with those 16 working meetings scheduled.
There is no doubt going to need to be compromise, and that doesn't come as a surprise to somebody like you or anybody who's been following and working on this as you do. But I would use the phrase intentionally about ambitious compromise. We cannot compromise to the detriment of the fundamentals that we're trying to achieve here. And the fundamental aim we're trying to achieve here is to deepen our Capital Markets Union and to deepen investment opportunities across the European Union. And you know, I'm personally a believer, and I think we all are, that if we can grow the size of the pie, everybody benefits ultimately.
And at the moment, it's not a question, and I speak in the role of presidency, but it's not a question of this country benefiting or this country, it's a question of if we can make a bigger pie we will all benefit. And there's too much discussion in my view on dividing the pie rather than the size of the pie, which is far too small. So I've heard lots from my ministerial colleagues around the issue of central supervision. This is the starting point in the Commission proposal, that is a statement of fact. I've also heard from ministers from a range of member states that anything in that space needs to add value, needs to be clearly justified, should not add cost, should be proportionate, should be targeted.
My honest assessment though, Chair and Mr. Weber, is my honest assessment is that member states are willing to do a deal and find a landing zone. And what I'm trying to do as President is facilitate that deadline and that need for that compromise. And then obviously we will look forward in due course to significant engagement through the trilogue process with Parliament.
Claire Fita
Thank you very much, Madam Chair. Je vais m'exprimer en français. Merci beaucoup Monsieur le Ministre, ravi de pouvoir échanger avec vous aujourd'hui et merci de votre présence.
J'aurai trois questions très rapides sur la crise énergétique et notamment sur la clause dérogatoire nationale élargie aux dépenses énergétiques. La nouvelle fermeture du détroit d'Ormuz continue de mettre la crise énergétique au cœur de nos préoccupations. Première question, cette clause, elle est activée à la demande des États membres. Or, on constate que ce sont surtout ceux qui disposent de marges de manœuvre budgétaires qui activent cette clause et ceux qui n'en disposent pas, bien entendu, hésitent à le faire car cette flexibilité n'efface pas la dette qu'elle autorise. Donc cela crée une protection inégale des Européens face à la crise énergétique.
Comment le Conseil appréhende-t-il cette question ? Deuxième question, la flexibilité énergie, elle s'inscrit dans le même plafond de 1,5 % du PIB que la clause dérogatoire accordée aux dépenses de défense. Donc comment garantir que les États ne sacrifient pas à terme l'une des priorités par rapport à l'autre, énergie, défense ? Et dernière question, la solution bien sûr durable à notre crise énergétique, c'est notamment la décarbonation, mais elle appelle, comme la défense d'ailleurs, un budget européen capable de les financer durablement. Donc quelles ressources propres la présidence irlandaise entend-elle défendre ?
Je vous remercie.
Simon Harris
Merci beaucoup, Madame, thank you very much for the question. And can I say at the outset, I'm so pleased that you raised the issue of energy because more and more we're having discussions at ECOFIN and indeed I participate in discussions at Eurogroup where there's a real and correct recognition that you cannot have economic security without energy security. Everybody here knows we have had two major energy shocks in the last half a decade, in five years, caused by circumstances outside of our control. But what is within our control is to build up our own energy independence and our own energy autonomy and resilience as well. And we must, you know, I don't wish to over-comment on ongoing geopolitical events other than to say while things seem to go to moments of de-escalation and moments of escalation, regardless of that, we should plough on with a new intensity when it comes to the energy agenda because it is an economic issue.
And more and more economy ministers and finance ministers and committees like this are rightly talking about this is not an issue that can or should just be left to other sections as well. I do recognize the importance of the national, the escape clause. And I do understand how it's triggered through Member State requests, but I would also balance that with saying we shouldn't lose fiscal discipline either. And we do need to be careful in relation to this that we don't store up further challenges for Member States or, forgetting Member States, for our citizens into the future after we have all collectively worked so hard to bring the European economy to a better place. I would make the point, but I do take and will reflect on that point you make about the differences between the ability of some Member States and others.
I think this does highlight the need to fund all of this, does highlight further the need for SIU. Because there is no, regardless of people's political perspectives and we'll have a variety of perspectives in this room, there's no way Europe can fund all of its needs without deepening its savings and investment union. And I very much see, while it can sound like something abstract to our citizens, I very much see it as part of the prescription to meet the needs of our European economy. On the choosing between, or how you put it, not my words, but the choosing between defense or energy, or the concern that one may have to choose, I would think share the perspective you're implying that actually security requires security in the traditional sense, defense, security from an energy point of view, and it is all linked in terms of our overall security.
I hope that's what happens. The Irish presidency will work honorably and intensively as an honest broker to try and produce a new negotiating box at the start of October, and then we will refer that to the European Council. And all of these issues will have to be, I'm finding European budgets are a little bit like national budgets, we all have lots of ideas as to what we rightly need to spend and invest on, and then we also have to then try to work out how to fund it. And I think the energy agenda, the defense agenda, all of that will have to be a part of that MFF discussion in the round, and we will play our role as that honest broker and facilitator. Merci.
Enikő Győri
Thank you, Chair. Minister, welcome, I have three questions to you. The first one is on the conditionality in the next MFF. In the national reform programs proposal by the Commission, there is a clear intention to make the disbursement of funds conditional on the implementation of the country-specific recommendations and the compliance with the EU economic governance framework. For our group, this is highly problematic because it would concentrate huge discretionary powers in the hands of the Commission.
I would like to know on this the presidency opinion and whether you envisage to build in safeguards that would prevent this excessive discretionary power for the Commission in decisions affecting access to EU funding. The second question was on the financing of the Energy Union, and I'm quoting here your program, that the presidency will drive the Union's energy agenda forward to build true energy security supporting the deployment of indigenous renewable energy and clean energy and building robust grids. However, the Commission estimates that completing the Energy Union would require around 584 billion euros investment. In the current fiscal environment, where the presidency envisage to mobilize these resources from and how does it intend to balance these investment needs with the Union's fiscal sustainability objectives? And finally, the fossil fuel subsidies and fiscal policy.
In the CSRs, the Commission continues to advocate to phase out fossil fuel subsidies on the grounds on fiscal consolidation and market efficiency. At the same time, the proposed, the Commission proposed greater fiscal flexibility through the national escape clauses to support investments aimed at strengthening Europe's energy security. So how would you as minister explain to the citizens that Commission requests the withdrawal of national support schemes for households, meanwhile simultaneously would like to introduce new EU-level interventions to cushion the energy security? So do you, don't you see any contradiction here and don't you find it embarrassing? Thank you.
Simon Harris
Well, thank, thank you so much for your questions. I suppose the first point I'd make in relation to the country-specific recommendations and that point you make around safeguards. I suppose we've already seen through the RRF the conditionality element, and as we close out on that process throughout this year, perhaps there's opportunities to, as there always is at the end of any funding program, to, to stocktake and indeed consider the learnings as well. We have, while I accept it is July and we endeavor to have an MFF, we the European Union, agreed by the end of the year, there is a huge amount of work to be done between now and then, and I'm very conscious on the role that we occupy as presidency to, to be that honest broker.
So the first thing we intend to do is engage with all member states, to listen, to listen intensively, to hear views, and then to use those views to endeavor to produce a new negotiating box in the month of October. It will then be a matter for the European Council and indeed our national leaders under President Costa's chairmanship of the European Council to take the matter forward. I mean, on the issue of energy union and energy independence, if I can call it that, and renewable energy, I mean, you're quite right that the costs of this are very significant. That is true. I would also argue the costs of not doing this are very significant, and we'd probably agree with that too, because we have seen, I certainly see in my own country, I'm sure you see in yours, I'm sure many of us see in ours, the the shocks that the current reliance on imported fossil fuel from abroad causes to our economy, but but not even to our economy at a macro level, to our citizens, to our citizens at the pump, at the at the pump, in the in the home, in the business, is very, very, very significant.
So I think the question is how we fund it, because I believe it's imperative that we get to where we need to get to on energy security. And I would make the point that yes, there will be big calls for leaders and others to make in the MFF, and all of this, as I said to the previous speaker, will need to be part of the conversation. But also, no no conversation can be specifically about just public funding. It also has to be about how we can attract and drive private investment into the European Union. And again, and you'll see a repeated theme from me here, but it's intentional because it's true, that need to deepen our capital markets union, that need to create new investment opportunities, that need to bring private investment into the European Union and stop it flowing out to other parts of the world at a time when we desperately need it, is a very, very important part.
Thank you. ECR, Giovanni Crosetto.
Giovanni Crosetto
Sì, grazie presidente, buongiorno ministro, benvenuto. Torno anch'io sul tema toccato dal collega. Domani come shadow rapporteur del pacchetto denominato Market Infrastructure Package presenteremo i nostri emendamenti a questa importantissima proposta legislativa. E uno dei temi più dibattuti sentiamo anche in Consiglio riguarda il ruolo di supervisore che potrebbe avere ESMA di fianco a quello delle National Competent Authorities a seguito di questa revisione legislativa. Oltre alla proposta della Commissione che già ne aumenta di fatto poteri e responsabilità, ci sono proposte di emendamenti che vorrebbero ulteriormente aumentarne le competenze, come ad esempio la supervisione diretta dei grandi asset manager.
Noi sosteniamo invece l'approccio della gradualità, ministro, in quanto fino a quando ESMA non avrà sviluppato le competenze necessarie a partire ad esempio dalle risorse in termini di capitale umano, il ruolo delle National Competent Authorities dovrà rimanere centrale così da garantire efficienza della supervisione, costi contenuti e soprattutto competitività dei mercati. Forse mi è sembrato di capire che su questo potrebbe esserci un compromesso. Ad ogni modo volevo chiedere un suo giudizio su questo e quindi sapere se secondo lei, ministro, ESMA è pronta per questo percorso oppure se è meglio arrivarci con gradualità. Grazie.
Simon Harris
Thank you very much, Mr. Crosetto, and thank you for the question and your work on MISP.
And firstly, can I say I'm very respectful of the process that is in place in terms of ultimately trying to agree an outcome for MISP and the important role the European Parliament will have to play as co-legislators, and I look forward and hope we'll have the opportunity to work together on that in the time ahead. And that's why to advance that and get to that point, I'm endeavoring to get that Council agreement in October so we can begin to see how we can engage in due course as well. So the first thing I have to do, and this is important in the role of presidency, is not to prejudge the landing zone of the package, because my genuine role over the next number of weeks is to try and listen and find landing zones and put forward compromises. But can I just say to you at the outset, I do genuinely believe that there are landing zones, and I do believe there's a willingness within the European Union member states to try and make progress on this once and for all and bring about a deal that would make a significant difference for the investment in the EU. I will share some thoughts on supervision, but let me just say when we had the discussion at ECOFIN last week, I was very eager that we discussed the package rather than any one element, because I suppose the P in MISP is an indicator to all of us that it is a package and that supervision isn't the only issue here today.
Actually, what we're trying to achieve is market integration, and we nearly have to come back to that. So what's the aim here? The aim is to have market integration. Then the appropriate secondary question is, if you're going to have market integration, what is the required level of supervision to ensure that that market integration can work in a credible and functioning way? Sometimes I think in lots of member states and lots of discussions, we nearly start from the supervision question and forget the market integration piece, and I don't mean that in relation to your question, I mean that more broadly.
So market integration is the aim here. If we're going to have market integration, what is an appropriate, balanced, proportionate level of supervision to underpin that market integration? So that's a point I'd like to make. In relation to what I've heard from ministers, and I'm speaking from what I've heard from ministers rather than my personal perspective, because I don't have a personal perspective for the next six months, I'm an honest broker and I want to get this job done. But what I did hear from ministers, which I think may be something similar to what you're saying, is that there won't be any sort of big bang moment when it comes to ESMA, that ESMA does need time.
Some of the issues you raise are very valid. There's also the issue around, and I've heard this from ministers too, and I said this earlier, when it comes to any centralized supervision, does it add value? Why are we doing it? Is it justified? Does it add cost?
Is it proportionate? Is it targeted? So all of these are issues that will be considered as part of that discussion by member states, I have no doubt. And I'd balance that comment also with saying what I've also heard from ministers is saying, yes, ESMA may require time to take on some additional responsibilities, but that can't be open-ended either. And the phrase that was used a lot last Friday in ECOFIN was the phrase about an ambitious compromise.
And words matter, because you can always get a compromise, right? We're politicians, we can find compromises. But we need to find a compromise that is achieving the ambitious aim we want to achieve, that sends out a powerful message to the world that Europe is open for business, Europe is open for investment. So it is going to be a balance and walking that line between recognizing the different views that exist, by recognizing that we have to have compromise because otherwise you don't get an agreement, but also that anything we do has to be proportionate. But in direct response to your question, that no big bang moment, providing time but not necessarily open-ended, is certainly what I'm hearing from counterparts, and we'll take that into our engagement now.
Thank you.
Stéphanie Yon-Courtin
Cher président, la présidence irlandaise s'ouvre à un moment décisif pour l'Union de l'épargne et de l'investissement, et la Commission a proposé des textes ambitieux à la hauteur des défis auxquels l'Europe est confrontée. Et c'est sous votre présidence que se jouera la trajectoire de la plupart de ces dossiers. Vous allez en donner le rythme, la méthode et bien souvent l'issue. Il faudra donc réussir ce qui est le plus difficile : conjuguer rapidité et rigueur. Et dans cet esprit, je vous poserai plusieurs questions.
Le Conseil ayant déjà arrêté sa position, quelles dispositions du paquet pension la présidence irlandaise considère-t-elle comme prioritaires dans les négociations à venir ? Et la deuxième question porte sur la politique de concurrence. Vous savez, mon rapport adopté à une large majorité au Parlement la semaine dernière appelle à faire émerger des champions paneuropéens, des champions solides face à la concurrence mondiale, mais sans jamais fausser le jeu de la concurrence et jamais au détriment des consommateurs. Votre présidence entend-elle alimenter les travaux de la Commission européenne sur les futures lignes directrices sur les fusions ? Et comptez-vous être vraiment ferme face à la pression américaine et des géants de la tech pour affaiblir le DMA ?
Alors la première, c'est Markus qui l'a posée, et donc je passerai à la suivante.
Quel est aujourd'hui le niveau d'ambition des États membres sur ces sujets ? Merci.
Simon Harris
Thank you, merci. So in relation to the last question first, yes. This, Ireland assumes the presidency for the eighth time and we intend to adopt the same approach that we brought to our seven previous presidencies, which is hard work, diligence, determination and a willingness to work across member states and respectfully with all institutions to drive forward the agenda, particularly the shared agenda that we have in relation to the one Europe, one market roadmap. We always want to have as Europeans a good relationship with the United States of America, our trading relationship matters. But we are also Europeans and we must always be true to our own values in how we go about our business.
And I look forward to approaching my role as president of ECOFIN for the next period of time in that vein and indeed engaging with the United States through a variety of appropriate fora, including representing the Council at the G20 later over the summer into the autumn, into the autumn months as well. Fully agree that we've taken on the presidency at both a decisive moment and as you, as you rightly imply, a challenging moment as well with lots of big and important decisions and files that we must work on together. And I note your, your amplification of the comments of Marcus, of Mr. Weber in relation to MISP and I look forward to hoping to have the opportunity to engage with this Parliament in due course. On the issue of the pensions package, we obviously look forward to engaging with the Parliament on this under the leadership of our predecessors from the Cyprus presidency. I know the Council agreed the negotiating mandate for pensions.
Member states were able to agree a common position and we're ready to start trilogue negotiations. I think this is an important file. It does form, as you rightly imply, a part of that larger savings and investment union agenda as well and it has the potential to increase pension savers' choices by providing that genuinely pan-European option, but crucially by trying to mobilise financing for our real economy. So as co-legislators, chair, we're fully committed to progressing the file and we want to work with Parliament to try and deliver on those ambitious timelines during our presidency.
Aurore Lalucq
Thank you. I don't think that Siegbert de Rosey is in the room. No, so second round of question with EPP and Regina Doherty.
Regina Doherty
Thank you, chair. Dé ghrásta, Tánaiste, agus fáilte romhat go dtí Parlaimint na hEorpa agus Coiste Airgeadaíochta. Tánaiste, one of our principles, and I know this has been touched on obviously by yourself and colleagues today, is to deepen the European capital markets and give wider access to both citizens and businesses the financial resources that they need. And the financial sector obviously is vital in Europe for our growth and needs a framework that incentivises investment and innovation.
You have set a really important but really ambitious goal of achieving a Council general approach on MiSP by October. Now given the political differences that we all know exist, can I ask how magically you think you're going to actually achieve that? Particularly, it's like I know it's really ambitious but it is genuinely such a short time. Do you think the goodwill is there? Do you think the engagement you will see, I hear the 16 meetings that you're going to have between now and October is obviously very, very welcome.
But how do you approach that agreement of that general approach given the political differences that we currently see visible?
Simon Harris
Well, go raibh maith agat Regina and you've known me a long time, you've never known me to lack in ambition. So, but we need to be ambitious and I know you and I share a view on this and I want to thank you for your work on this because when we talk about savings and investment union it can sound terribly kind of lofty and it can sound terribly distant to our citizens. But the work that you and I believe we're trying to do in Ireland at the moment around bringing in savings and investment accounts for our own citizens and making sure that people's actual savings don't just end up in low interest deposit accounts but actually have an opportunity to earn a return. These are practical outworkings of trying to create a culture of investment in the European Union to really build up economic resilience for our citizens and for our country and to prepare for the demographic, the aging changes and the likes that we know we're going to see. It's a really fair question you ask.
I'd make a couple of points. I don't necessarily share the view, not necessarily your view, but the view that this is that this is kind of a very kind of sudden thing because I've been at, even in my time as Finance Minister let alone my time in other roles including as Taoiseach, I've been in many conversations where people have been talking about driving this forward. And I've been involved in too many conversations that are circular. I'm in favor of the savings and investment union but. I'm in favor of the market integration supervision package but.
Well at some point we have to stop saying the first bit and actually focus on the but bit and resolve it. So what my team did when we assumed the presidency was try to capture all the but issues if I can call them that, the outstanding issues, the open issues, put them in a paper and say to our colleagues in the Council, is this it? Is this what we're talking about? Are these the issues? And if not, tell us now or not quite hold your peace forever, but tell us now.
And in fairness to colleagues and huge intensive engagement and building on the very excellent work by Cyprus, we got an agreement that these are the open issues. We then said, can we get this done by October? And again October isn't actually me being genuinely, isn't actually anything about me being ambitious. It's actually saying well hang on a second, our leaders, the European Council, our bosses from the perspective of the Council, sent us a timeline and they said get this done by the end of the year. Well if we don't get it done by October, how are we going to get it done by the end of the year?
We're co-legislators, how are we going to get into this institution and how are you going to be able to order your business which is entirely a matter for yourselves? So I am a believer that October is no harder or easier than November or December or January or February or March and that at some point we got to call it. And what I would say to member states big and small, member states with deep financial services sectors and member states with very little, nobody has anything to fear about this. If we get this right, there will be more investment in Europe than ever before. If we get this right, there'll be more jobs in Europe than ever before.
If we get this right, we will stop the hard-earned money of Europeans flowing out to every other part of the world and not here. So detail matters 100%. And speed can never come at the cost of quality, 100% agree. But I really think and I'm very grateful to colleagues in the Council for their support on this, I really think if we put our technical teams on this and say 16 intensive meetings, give it your all, find the landing zones, we can give it one hell of a shot. So that's the rationale.
I accept it's ambitious but I think I think we're paid to be ambitious.
Tsvetelina Penkova
Thank you, Madam Chair. Dear Minister Harris, thanks for being here. And you've actually already started replying to the question I had in mind to ask you. But of course, you're very right in pointing out that the Commission and the Council, they stress repeatedly that Europe needs to mobilize private capital to finance innovation, technological growth, competitiveness. But we still haven't seen enough done on the Savings and Investment Union.
So what concrete progress does the Irish presidency envision in that particular aspect? Because especially with many of the legislations we have at the moment on the table at the European Parliament, we really need a properly working capital market within the EU. And if you allow me a second question, very briefly on the digital euro, which is a hot topic at the moment, both politically and also in our society. Do you envision any steps to ensure the citizens' trust and address some of the speculations which are coming from the political spectrum? Because at the moment there is quite a lot on that.
No need to say more details. You understand where I'm coming from. Because if we don't take the measures now, it might be too late at some point. Thank you.
Simon Harris
Well, thank you so much. So firstly, I agree with you. I love Europe. I love the European Union. I think it's one of the most successful economic and peace projects in the history of the world.
If we don't make the case for Europe, who else will? But there are areas in which we've been too sluggish and too slow. And completing the work of the single market is one such area. And we always talk, probably in this Parliament, certainly in the Council, certainly in my own parliament, we often talk about what's happening in other parts of the world and the economic impact on that. And that's all important, absolutely important.
But there are decisions that we can take that would have much greater impact than decisions anybody else can take on our European Union if we have the courage to take them. And that is the challenge of our generation, regardless of our political perspectives. And I think when it comes to SIU, I think the Irish presidency working in partnership and working as co-legislators can make progress on SIU in really kind of three ways. I mean, the pension package discussion that we already had, the securitization file which we'd like to reach an agreement on during our presidency, and the work on MISP and the market integration and supervision package. And I think if we were to get those three things done, I think that would make a real and meaningful difference.
On digital euro, I mean, the case for digital euro is compelling. It's also just becoming more and more compelling and stronger every single day. I think that point you make, though, about, or at least, sorry, some of what I take from the point you made around financial literacy or an awareness about this is really important. Because again, and I will resist saying anything provocative, but should vacuums arise, vacuums get filled by often misinformation or disinformation or genuine questions and observations that people have. And it's really important, there's an onus, I think, on all of us.
I think good work has been done with the financial literacy ambassadors network. That could be one route. But I do think we need to collectively dig deep as institutions to ensure that our citizens get those facts. I think we need to be clear that it's effectively a digital form of cash. It's optional.
It's anonymized. It has a security element to it in terms of the strategic and economic autonomy of the European Union as well. And I was really heartened by the fact that when we had our first trilogue just two days ago, it was really constructive. And I want to acknowledge that, and I want to thank the Parliament for their constructive engagement. And I know both institutions agree on a speedy adoption of the single currency package with a political agreement by the end of our presidency.
We both share the importance of this matter. And I think this can show our citizens that the digital euro and physical cash are complementary. And together they're going to make our European payment systems more flexible, more adaptable, more innovative. And the digital euro will also achieve the highest degree of data protection for citizens' transactions in a digital world. But if if part of the question is, do we have a huge amount of work to do to ensure we continue to bring our citizens with us and inform our citizens, I I couldn't agree more.
Thank you. Any request for the floor? No. Okay.
Simon Harris
Why not? Go raibh míle maith agat as we say in Ireland. Thank thank you very much. And thank you very much for your engagement. I just want to really reiterate a couple of points.
One is that I and Ireland and the Irish presidency have the utmost respect for this institution, the European Parliament, and for its role as a co-legislator. And we have a lot of work to do together. And we intend to approach that in a workman, worklike woman fashion rather. We intend to be constructive. We intend to be efficient.
But I do want to stress that need for collective urgency. I think a lot about those who went before us. And if they made incremental moves or incremental shifts, we wouldn't have the euro. They made incremental moves or incremental shifts, we wouldn't have the single market. You know, now is the time for big and bold decisions.
And we live in a world that is fast evolving, quick moving, quick paced. And we've a choice. Keep commentating on it or or get our own act together. And I think when it comes specifically to our collective remit, there are a number of files before us that if we can find common ground or landing zones or ways forward by the end of 2026, we will have made an impactful and positive difference in the lives of our citizens and our economy. And I want to proceed on that basis.
And I think you've gotten the point from me that MISP is a major piece of work for us. I'm really encouraged by digital euro and the progress this this week. I think those two bodies of work alone are substantial along with the variety of other files that we've discussed. And I really look forward to working with you in that constructive fashion in the time ahead. Thank you.
Aurore Lalucq
Merci. Merci beaucoup Monsieur Monsieur le Président. On était ravis de vous avoir ici. Je peux déjà dire que le travail est très constructif avec la présidence irlandaise. Qu'on travaille déjà très bien ensemble sur un très très grand nombre de dossiers puisque vous héritez d'un très grand nombre de dossiers.
Que ce soit la question de la titrisation, que d'autres dossiers qui ont été votés d'ailleurs aujourd'hui par par nous tous très chers collègues et qui vont arriver en trilogue. Que vous avez sous votre présidence effectivement deux piliers de ce mandat que sont d'un côté l'euro digital et de l'autre MISP. Là aussi je vois beaucoup d'ambition et beaucoup de facilité pour travailler ensemble. Et franchement dans ce Parlement il y a toujours eu beaucoup d'appétit pour l'Union des marchés de capitaux. On a toujours été plus ambitieux en fait que les États qui peuvent avoir des différends et ça se comprend légitime hein d'ailleurs des intérêts nationaux qui divergent un petit peu.
Et je crois qu'on est très heureux de sentir qu'il y a autant d'appétit au Conseil. Et si vous arrivez à avoir un accord très rapidement franchement bravo à vous comme je le disais en blaguant tout à l'heure on vous fera construire une statue parce que c'est vraiment quelque chose de difficile de réussir à mettre d'accord ces États sur un sujet dont on parle depuis si longtemps. Et vous avez raison je pense qu'on peut réduire le temps de discussion et être tout à fait ambitieux puisqu'à un moment c'est plus une question de c'est plus le temps en fait qui permet de trouver une solution bien au contraire. Et que le on a une opportunité maintenant d'aboutir à la Saving and Investment Union et il faut pas la louper à mon avis. Et vous avez pu comprendre que ce comité cette commission est est très partante pour avancer rapidement et de manière ambitieuse sur ce dossier.
Donc merci infiniment à vous et à vos équipes. Merci.
Eh bien chers collègues, je vais commencer en français. Je suis ravie d'accueillir pour ce dernier public hearing avant l'été le président du Single Resolution Board, Monsieur Dominique Laboureix. C'est la deuxième fois qu'il vient devant notre commission cette année. Il va présenter le rapport annuel du Board pour l'année 2025. On est aussi ravi de l'avoir avec nous parce qu'il y a la communication qui va, qui est dans les tuyaux sur banking competitiveness et peut-être on serait intéressé d'avoir un peu son avis sur le sujet s'il peut nous le donner.
Donc comme d'habitude, je vais donner la parole à Monsieur Laboureix pour un opening statement et ensuite il y aura les questions-réponses. Et je vous donne tout de suite la parole Monsieur Laboureix.
Dominique LABOUREIX
Merci beaucoup Madame la Présidente et good afternoon honorable members, ladies and gentlemen. It's a pleasure to be here with you today. Let me start by the brief update on the SRB's work before moving on to simplification and competitiveness as you've mentioned it already and to the international dimension of resolution. A few days ago we published our 2025 annual report. I won't dwell on it today and I've kept the committee regularly informed throughout the year so there is nothing coming as a surprise to you.
So let me simply highlight four points. First, we continued strengthening banks' resolvability through testing, crisis exercise and on-site inspection and our intention is to publish the resolvability assessment in the coming weeks and you will see that we've seen progress. Second, following the entry into force of the crisis management and deposit insurance review, we started working on its implementation. Third, we've been deepening our cooperation with our partners across the banking union, especially the national resolution authorities and the single supervisory mechanism. And fourth, we further enhanced our operational readiness via different exercises in particular.
Let me move to simplification. I told this committee in the past that what where possible and whenever possible and within our mandate, we would simplify our procedures and eliminate unnecessary burden. We are progressing on that commitment. A recent example is our new streamlined procedure for approving early redemptions of MREL instruments, making the process faster and more predictable. We have also substantially shortened and simplified our plans, freeing up SRB resources to focus on what really matters while reducing burden on banks by requesting in particular less information than before.
But simplification is only one element of the broader discussion on competitiveness, which is rightly high on the European agenda. As the Commission's report on competitiveness nears its publication, I will say that it could be on this Friday, I'd like to leave you with three considerations. First, genuine simplification that does not come at the expense of resilience requires a holistic approach. Everything is interconnected. Let me give you two examples.
Some people argue that MREL requirements are just too high, or too complicated. But MREL exists for a reason. It ensures that resolution can be financed using investors' money and, if that's not enough, tapping the Single Resolution Fund. It first ensures that the bank can emerge from resolution meeting its capital requirements from day one. Reviewing MREL in isolation from capital requirements, supervisory expectations, macro buffers, and the broader prudential framework simply does not work.
Without enough MREL, resolution would fail and financial stability would not be restored because the bank on Monday morning would not be solvent enough based on the requirements coming from the other authorities. If we want meaningful improvements, we need to look at all these elements together as much as possible. Another example I wanted to mention you today is liquidity. It's clear that banks would be more competitive if liquidity could move freely across bank subsidiaries within the Banking Union. But again, this is not that simple.
The individual requirements currently in place also reflect the fact that the Banking Union still lacks a common deposit insurance scheme and an adequate liquidity facility beyond the Single Resolution Fund. I've mentioned this already several times here. If we want to remove these requirements, we also need to close these structural gaps. My second key message to you today is that it's important that on the road to competitiveness, we don't add new layers of complexity in decision-making. Coordination between authorities, absolutely, we can certainly improve it, even if within the Banking Union it works already very well, but independence of the Single Resolution Mechanism should not be compromised, and I've heard some ideas which are strange to me.
Clear responsibilities remain essential, especially for crisis management. My third message is about this notion of complexity of resolution. I've read in the leaked elements that predictability is high on the agenda. And I agree with this idea of being as predictable as we can. But at the same time, we need to retain sufficient flexibility in deploying our tools.
Actually, one of the issues with the current framework, the one of today, is that it contains still many constraints. That was understandable in '15, when the framework and the institution in charge of implementing it were entirely new, but today I think it's the right moment to see and to assess if those constraints remain necessary. Let me move to my third chapter about the international dimension of resolution. As Europe pursues greater competitiveness, we should not lose sight of another essential objective: preserving the international credibility of our crisis management framework. Financial stability is international by definition.
As chair of the Financial Stability Board's Resolution Steering Group, I experience firsthand how closely resolution authorities around the world can work together.
The international dimension has very practical implications. For example, when resolving a cross-border bank, we must also navigate the legal framework of third countries. In particular through our work at the FSB, we are making progress on the effective application of our cross-border bail-in, in particular in the US. That's why I would encourage you to keep one final principle, I mentioned three but in reality it's four, in my when when you consider future reforms. Simplification and competitiveness are important objectives, but in the international dimension it's key to maintain the effectiveness of our resolution framework.
This is essential not only for financial stability within Europe and in particular within the Banking Union, but also for maintaining our credibility with our international counterparts. I would like to conclude this short intervention by thanking this committee and in particular the rapporteur of the 2025 Banking Union annual report, Honorable Regner. We share the objective of making the Banking Union stronger and more effective and we look forward to working with this commission and also with the co-legislators at large in the months ahead. As practitioners, we stand ready to contribute to all the important legislative files that will come before you. Many thanks.
Thank you Dominique. I give the floor to Markus Ferber for EPP.
Markus Ferber
Yes, thank you very much Mr. Laboureix, pleasure having you here before the summer break. And I have two short questions. You know and you spoke about it, the competitiveness report commission is going to publish on Friday and I looked into your responses to the questionnaire commission has brought forward on in springtime and I found a lot of no opinions. So SRB has no opinion on a lot of of issues, was very interesting. On the other hand, the commission competitiveness communication will likely set out a considerable more concrete resolution agenda than the SRB itself proposed.
Alignment MREL with the international TLAC standards, streamlining resolution planning cycles and reforming the prior permission regime for MREL buy-backs. So how does the SRB see these elements and what will be the contributions of the SRB more than what we have had a chance to read in your comments? And the second question is, in one of your responses the SRB stated that the Single Resolution Fund available means of Euro 81 billion would be insufficient to provide market confidence in the failure of a global systematically important bank. And therefore you call for a European solution guaranteeing liquidity after resolution without naming the funding source, while ruling out central bank emergency liquidity assistance and ad hoc government guarantees on the grounds that such support cannot be committed in advance. Any such arrangement would still have to respect the treaties' own limits on EU budgetary commitments and spending authorizations.
So given those treaty constraints, what concrete legal architecture does the SRB envisage for delivering this ex-ante liquidity guarantee? Thank you very much.
Dominique LABOUREIX
Thank you, thank you very much for these two questions. First of all, thank you for this careful reading of our answers to the no no, but that's that's that's very highly appreciated that somebody read our answers, so thank you for that. Obviously I entirely disagree with the idea that when we express a no opinion it means that we don't have any opinion. It means that we thought that on a number of questions we were not the best placed to enter into the debate due to the mandate we had. So on the questions about do we need to change the calibration of the some supervisory measures, we decided with a clear intention not to enter into this debate even if we can have an opinion because it's not exactly our mandate.
And we let the we coordinated with the SSM as you can imagine and we let the SSM answered on that front. So this explain why the proportion of of questions we answered is is perhaps seen as limited.
In reality, it's just because we are focused on the resolution and resolvability topics. On them, I think we are proposing real changes. Perhaps again, we expressed them perhaps not as strongly as some other respondents, but we are clearly mentioning a few elements. We are ready to really simplify at the price of not deregulating, because as I said during my introductory measures, we think that what matters is to be able to resolve the bank with sufficient resources on Monday morning. If we curtail this requirement or that requirement and at the end we are not able to find enough resources and we cannot meet the target to go to the Single Resolution Fund, which is 8% of capital instruments as you know, we'll be in a complicated situation, not being able to implement successfully our resolution scheme.
So that's why we've addressed this, saying, well, careful to this holistic dimension, take everything into account, don't disentangle MREL from the rest. But if you want to simplify the computation of MREL, if you want to align the definition of MREL instruments to the TLAC ones, we are absolutely open to that. And we are ready to discuss item by item and to provide our expertise to those who would like to enter into the details. On the general architecture, I think we have repeatedly said that we were in favor of development of the third pillar of the Banking Union. I think that it's still needed.
We can, let's say, take into account new ideas, new approaches, but what matters is to, let's say, give the global confidence that we are entirely equipped at the Banking Union to organize successful resolution decisions and or liquidation for the entities which would not be covered by resolution. So that's why we need to ensure from a financial stability perspective, not the legal considerations, but from a financial stability perspective, we need to increase trust in our mechanism. And we've reiterated our support to EDIS under new approaches, why not, but still this third pillar is definitely needed. And I can continue like that, but this is the transition with your second question, because you mentioned liquidity in resolution. So let me perhaps explain a little bit more what we have in mind and what we had in mind when we answered this question.
First of all, when the bank fails, it's because there are big difficulties. If they were not, the bank would not be failing. So at that moment, the bank is, generally speaking, under an enormous pressure coming by the markets, coming from the different stakeholders. And it is translated, generally speaking, by a liquidity shortage. So the access to the CCPs, for instance, is more costly with margin calls.
And so generally speaking, when the bank enters in resolution, the question of using ELA, as you mentioned it, the question of pledging more collateral is already solved by the lack of resources in a sufficient way. I don't say that there's zero, but there's not sufficient amount. This is where the Single Resolution Fund can enter into force. And we can support the liquidity in resolution of this bank on top of the solvency measures. But that's true that with 81 billion euros, which is not nothing, we can solve the case for a number of small banks, mid-sized banks, but we cannot solve the case for the biggest players in the Banking Union, I mean the G-SIBs and a little bit beyond, because we know that the needs, the immediate needs for liquidity will be higher.
The access to some counterparts is more costly in terms of liquidity. On top of that, there could be a bank run.
So that's why we've advocated year after year for first signing the ESM Treaty revision. There is still one only missing signature out of 21, what a pity. So if we could sign this agreement with the ESM, we would be, not us, we are not signatories by the way, but if this treaty revision could be signed, we would be in a better shape because this would bring us a bit less than 70 billion euros more, so reaching more or less 145 billion euros of available liquidity in resolution. Potentially this is not enough. In that case, we know that the story is about making sure that the Central Bank can provide this support, but what we want to be sure of is that the ultimate bill is not footed to the Member States.
So the idea is to use the capacity of the Single Resolution Fund Board to raise ex-post contributions to potentially repay the guarantees if these guarantees given by public bodies were used. So ECB as liquidity provider, SRB as guarantor, counter-guaranteed potentially by others, subject to the reimbursement by ex-post contributions. Without, this is the crucial difference with ELA, not more one euro of public fund coming from the Member States will be on the plate of the fiscal authorities at the end of this reimbursement process. So this is what we expressed in our survey answer.
Jonás Fernández
Muchas gracias. Hablaré en castellano. Bienvenido, Chair. Trasmito a Evelyn Regner sus congratulaciones respecto al informe del Banking Union que este comité aprobó este año. Y me gustaría también trasmitir mis propias gratificaciones a su trabajo en unos momentos en los que percibimos que el sector bancario, tanto en términos de supervisión como en resolución, pues parece que vivimos un momento tranquilo.
Y en la medida que vivimos un momento tranquilo debemos ser muy prudentes a la hora de revisar el marco legislativo no vaya a ser que volvamos a momentos pretéritos a los que no queremos, a los que no queremos volver. En mi caso agradezco también la contribución de su institución a la consulta pública de la Comisión para la elaboración de ese informe de competitividad que conoceremos en los próximos días. Y la verdad es que no puedo estar más de acuerdo en sus contribuciones y en sus comentarios en este comité. Pero me gustaría volver a la pregunta de mi colega Markus sobre MREL y TLAC. Ciertamente hay un debate sobre en qué medida podemos simplificar ambos ratios.
Usted ha dicho que el SRB estaría en condiciones de dar apoyo técnico, pero es cierto que no ha introducido ninguna pista. Ha dado pistas sobre cómo resolver el problema de liquidez en resolución, pero no ha dado pistas sobre cómo simplificar el uso de MREL y de TLAC. Y bueno, me gustaría saber si tiene alguna pista que ofrecernos. Gracias.
Dominique LABOUREIX
Muchas gracias. Let let me try to answer in English. So, the international standard for loss-absorbing capacity is called TLAC, so it's applicable to a small number of banks around the globe, the most systemic ones, 30. And for all the rest, it depends on the different jurisdictions. In this jurisdiction, in broad sense, I mean Europe, we decided to implement this request for loss-absorbing capacity to all the banks earmarked for resolution.
That means in reality, under the direct remit of the Single Resolution Board, around 90, 95, and 60, 65 from the less significant institution under the direct scrutiny of the national resolution authorities. So the the full family is 150-ish banks. For them, all of them, we are requesting a certain amount of MREL. And as I said, this certain amount of MREL is based on an an underlying equation which is very simple. As we say, at the moment of the failure, the bank is not anymore solvent and potentially liquid, but at least solvent, we intervene to rebuild the solvency to preserve the fine the critical function and to preserve the global financial stability.
So to do that, by essence, we say we absorb the losses, so there is nothing left at the moment of the of the the resolution weekend, and we rebuild. So all in all, we multiply by two the solvency requirements coming from the supervisors, including the and on top of that we add the buffers. So I give you an example, there's a requirement of let's say pillar one, pillar two for supervision of let's say 13% plus a macro buffer of 2%. So what we'll do is to compute more or less 26%, 13 by two, plus 2%, so 28%. Plus rebates, plus this, plus that.
This is where the complexity is because there's an an additional series of small amounts which can be added or withdrawn or are computed this way, that way. This is too complicated. And what so there's a sort of compulsory element which is the capacity to rebuild the bank on Monday morning at a solvent amount. Minus 13, everything is lost, plus 13, the bank is is solvent again and the SSM is satisfied and the ECB can provide liquidity based on this solvency. And on top of that the macro buffer obviously, or buffers depending on the on the structure.
A second element coming exactly from this Parliament and and the other co-legislators is the access to the Single Resolution Fund. If we want to make a contribution by the Single Resolution Fund, we need to absorb 8%. So this is another constraint. So we need to check that ex-ante before the crisis the bank is able to meet this this target of 8%, which is a purely European one. This does not exist anywhere else around the globe.
It was decided for good reasons. It's not for me to challenge that. But I just say that these are the two pillars of the computation of MREL. So and my holistic approach is exactly about that.
You can tailor MREL on TLAC, but if you do not check that you respect these two conditions, you risk missing the target. And so what because TLAC is a hard minimum. You can do more than TLAC if you wish. And TLAC is not connected to the 8% for accessing the Single Resolution Fund. So what I say is that we can certainly harmonize the definitions of some instruments computed for TLAC, computed for MREL.
They are differences. We can certainly harmonize them. Then to reflect on the amount of MREL, we need to take into account these two variables. So each time, and this is why we need to analyze this as a package with these holistic measures, each time you decide to change something on the macro buffers or on the supervisory side, there's an immediate impact on the computation of MREL. This is we are in the last coach of the train.
The first coaches of the train are supervision and macro resolution starts at the end because resolution is supposed to rebuild a safe and sound bank based on the needs expressed by the others. So that's why we need this holistic approach. So my suggestion to simplify MREL, I don't speak about the amount because the amount depends again on these two elements. But to simplify MREL, we have written in our answer to the survey that what we suggest is to have a sort of compulsory step one, which would be the pillar one for resolution, covering all the elements which are quantitatively necessary, so also coming from the supervisory side for instance. And then we would have a sort of step two, pillar two, which would be the qualitative assessment of resolvability.
And we could add a small element depending on the progress made by the bank in terms of resolvability. So this is the proposal we make. We are not speaking about quantity or quality. We can harmonize the definition. But we say that beyond these questions of quantity and quality, the key question is how we can compute without changing the amount.
And then let's discuss the amount. But if you want to discuss the amount, you need to discuss first on the supervisory and macroprudential sides.
Tomáš Kubín
Thank you, Madam Chair. Thank you that you're with us here today in this nice afternoon. I have two questions, two topics. First, we are living in very fast times and we are speeding up instantly. And the banking shocks from the last years, like 2023 and so on, shown that proven that the digital bank runs fueled by instant payments and social media panics now happen in matter of hours, not days.
This means that this traditional concept of the resolution weekend where the SRB has 48 hours or maybe a little more to stabilize an institution is rapidly becoming a relic of the past. Are your internal processes for identifying and mobilizing collateral and coordinating with the ECB genuinely fast and agile enough to handle something which I call blitz, so like multi-billion euro deposit flight on a random afternoon? And the second thing is a different topic. My second question concerns the interplay between national deposit guarantee schemes, DGS, and the Single Resolution Fund. What is your assessment of a potential merger of the DGS or EDIS and the Single Resolution Fund and what advantages would you see in it?
Dominique LABOUREIX
Many, many thanks for these two questions, extremely important to us in reality. On the first one, these features making the coming crises faster and faster. This is something which is obviously on top of our list of important topics. First of all, let me say that we should take the examples, the recent examples, in particular the Silicon Valley Bank of 2023, with some distance, because what we've seen is that while in Silicon Valley Bank everybody was able to withdraw immediately all the liquidity, the deposits, etc., in ten seconds, what we've seen is that there was no withdrawal at all in the European banks at the same time in the Banking Union. The stickiness of the deposits was at more or less 100%, except one big bank for which there was rumors, but apart from this one, there was nothing happening.
So I think we should be careful, while the social media elements, etc., were exactly the same ones. So I think we should be careful. It's all about confidence, it's all about trust, and for the moment, we, and I don't want to quote what Jonas Fernandez said earlier, but I think we've at least demonstrated that we were working hard, supervision, resolution, public authorities, to ensure this financial stability, and I think we were, during that time in 2023, we were trusted, and I think it's something to be noted. Does this answer your question? No, absolutely not.
So what we try to do is to prepare ourselves much better than we did in the past by preparing, in reality, every step ahead of a crisis. So to give you an example, we are preparing what we call repositories, and in these repositories, in reality, we are preparing draft decisions. Not the ones we will use, perhaps, but at least we are able to immediately take the decision which is already drafted, and we add just the name of the bank and the figures, obviously, corresponding to this bank. So we try to anticipate as much as we can. I must say, I already said it in this forum, that unfortunately there's a risk that we are confronted to new sources of risk, like cyberattacks, which can create a completely different situation where not only things are going very fast, but it's even not possible to withdraw any money because the data are corrupted or locked by a cyberattack.
And in that case, how can we implement a successful resolution scheme? This is an open question I raised already here. And to finish with my answer, perhaps an international dimension also, because in your question there's also this international dimension. We are testing our processes not only inside the Single Resolution Mechanism, but also with our key partners. And so we are organizing all along the year with key steps, but in particular one big which was in April this year, a TPE exercise which is organized with the US authorities and the UK authorities, the major counterparts for us.
So the idea is to simulate the crisis of a G-SIB. So we have a scenario, suppose that G-SIB number one is failing, what will you do, what I will do, what the others will do, and we try to coordinate and to anticipate as much as we can.
So is this a guarantee? No, it's not a guarantee, but we are taking all the steps we can take to be ready as far as we can. On your second question, obviously there's a dimension driven by some elements we've been able to read in some leaked documents, so let's see the final proposal by the Commission. In itself, to have under the same roof the Single Resolution Fund and the DGS is exactly by essence at the end the initial idea of EDIS. The third pillar of the Banking Union was to find a way of making this connection between the two purses stronger than it is today, with this centralized fund for resolution and this decentralized system of much more, by the way, than 27 DGSs, because in some countries there are more than one for the national banking system.
So we have more or less 34 DGSs around the Banking Union. So to put them together, it's a good idea. To merge them, it's another idea. What the FDIC is doing, because the FDIC is the American system which started from a DGS nature and which brought the resolution dimension on top of the DGS dimension. What the FDIC does is in reality to keep an eye open on the two different separated elements, that's to say liquidation or resolution, and they are not merging everything under the same process.
So the idea to put together, to make more connections between the two funds, certainly happy to analyze this, starting from a complicated situation as I said. Does this mean that we need to go to a full merger, etc., etc.? This was ultimately one of the ideas of the initial proposal of EDIS. Perhaps we should revisit this and find more clever approaches to manage the capacity to use the resources brought by these two mechanics. Something which matters, and I will finish with this one.
When you compare the power force of the FDIC, the American FDIC, and the power force of adding the Single Resolution Fund and the DGSs' resources, it's more or less the same. And it's comparable compared to the relative size of the banking system. So could be possible.
Stéphanie Yon-Courtin
Thank you. Euronews, Stéphanie Hamel-Courtin. Monsieur le Président, cher Dominique, la compétitivité est devenue le mot d'ordre de nombreuses discussions à Bruxelles. On voit qu'industrie, énergie, défense, tous les secteurs en appellent à la compétitivité. Le secteur bancaire ne fait pas exception et pour lui la compétitivité a un sens bien précis, celui de banques capables de se consolider, de grandir et de peser à l'échelle européenne.
C'est d'ailleurs un point qui est souligné dans mon rapport sur la politique de concurrence adopté la semaine dernière. Et dans ce contexte, on l'a dit tout à l'heure, nous attendons avec intérêt le rapport de la Commission sur la compétitivité du secteur bancaire qui devrait poser un diagnostic clair sur ces blocages. Le débat sur l'opportunité de privilégier l'intégration ou la simplification ainsi que sur les mesures prudentielles est loin d'être clos. La question est simple : est-ce que la Commission doit, au nom d'une approche globale pour couvrir tous les problèmes identifiés, privilégier des mesures ciblées et rapides ou est-ce qu'elle doit prendre le risque de rouvrir de longs et difficiles débats sur l'intégration et le système européen de garantie des dépôts ? On en a parlé déjà un peu tout à l'heure, mais c'est vraiment la première question que je vous pose.
Quel est votre avis sur ce débat ? Et puis deuxièmement, pensez-vous qu'il existe aujourd'hui une dynamique plus favorable pour progresser de manière décisive sur ces questions dans le cadre d'une réforme bancaire globale ou ce débat doit-il être mené séparément ? Quelle voie à suivre voyez-vous compte tenu des différents échecs passés finalement ? Merci.
Dominique LABOUREIX
Thank you very much. The two two important questions. I said it in my in my speech, I'm definitely in favor of call it a package, call it a holistic approach. I think that the the Commission intends to tick several boxes at the same time because in reality behind this question of simplification/competitiveness, we see that there are some interconnected elements. As I mentioned it already, I think that the discussion about the famous home-host debate, yes, but I am sure to find sufficient resources if there's a problem for my subsidiaries of the bigger group located elsewhere, can find a solution if we envisage a revision of the of the famous third pillar of the banking union.
So to have a completely separated approach for me does not make sense. We risk to be stuck with the same issues than before. The question is simple: how can I be better protected tomorrow than I am today in terms of trust in the mechanics we are building? If we separate in different bits and pieces, there's a risk of that we won't solve and we won't be able to to answer this question as simply as that. Yes, you can because at the same time we are giving more competitiveness possibilities by raising the the possibility to waive some requirements.
And as a counterpart, we expect the groups to support better their subsidiaries and if there's a problem, there's the third pillar of the banking union which is in place. So there's a rationality in taking all these elements together. And for me, it's much better, at a price of taking perhaps a little bit more time, to try to to solve these issues together than than one by one. Unfortunately, it's not by slicing and dicing that we are so sure to be able to reach an agreement very quickly. So let's let's perhaps take the time to try to find a global agreement, even if it's complicated, than slicing and dicing.
On on the debate about the different measures, I think in what we've read that the the right questions are really, really raised by the Commission in reality. And when they speak about fragmentation, when they speak about measures to simplify really the the structure of the requirements, when they speak about reporting, when they speak about a capacity to improve the the global resilience while keeping the capacity to finance the economy as you mentioned it at the beginning of your intervention, I think they they raise exactly the the right questions. And what they propose is more or less detailed. Let's wait for a more advanced report when they go to real proposals. But what I have seen is globally answering these questions around competitiveness from my point of view.
And I think, and we've said it already publicly and I repeat it today, I think we can from our perspective be globally supportive of what is suggested by the Commission. I think it goes exactly in the right direction.
Jussi Saramo
Thank you, Madam Chair. And thank you very much for your work and always being available to us. According to the draft communication on EU bank competitiveness, the European Commission is planning to lower capital requirements for EU banks, despite the fact that the profitability of European banks is very high. Following similar moves from the US and UK, it seems like the EU is deviating from agreed Basel standards amid rising geopolitical tensions, trade disruptions, and a possible AI investment bubble. It seems like European banks have had it too good for too long and the financial crisis is only a distant memory.
How would you assess this deregulation fever from the point of view of the resolution authority? And what kind of precautions are the resolution authority taking in order to make sure that this race to the bottom is not jeopardizing financial stability? Thank you.
Dominique LABOUREIX
Thank you for this question which goes right to the point. The authority I chair today is in charge of preserving financial stability at no cost for the taxpayer. And so this is exactly the mandate you've given us and I will fight day after day to implement fiercely this mandate. I'm really working hard to preserve financial stability at no cost for the taxpayer. And there's something you mentioned which is so true.
Memories are fading extremely quickly. And nobody remembers today, or some remember, but not so much, the cost we paid in 2008 and 2009 and etc. to save the banking system which was so necessary for supporting the financing of our economies. So we should not forget that. So that's why we've said from the very first day that it's not a question of deregulating. It's a question of making the structure more simpler, sorry, if we can, more predictable.
I've mentioned this notion of predictability in the sense of being understood and I suggested to refine for instance the MREL calculation, sort of step one, step two. We can say that we can change some parameters here and there, but the question of the quantum, do we need less, should be driven by the global considerations I've mentioned. What do we want to have a solvent bank today in the going concern? What do we want to have a solvent bank on Monday morning post-resolution? These are the two key questions.
What do we need in going concern, what do we need in gone concern? And the answer we've provided with Claudia Buch, I'm sure that you've organized recently a hearing with her, is exactly the same. We are really motivated to simplify, we are not ready to deregulate. And you mentioned the international standards. We are bound by this international standard and in particular on the resolution side, as I mentioned in my speech, because it's a question of credibility.
If the European authorities are not trusted anymore because the way they interpret, they implement the international standards is weakened, in that case don't expect that during the resolution moment the other authorities will follow your ideas. They will just say thank you, but we do not trust you, so we ring-fence and we take national decisions. And the financial stability will not be preserved at that price.
So it's very clear. So I don't want to enter into any judgment about a draft report which we've not seen yet. So let's wait for the report. Let's see what is written. If it's written explicitly that they want to weaken the standards, I will be obliged to mention that I'm not necessarily aligned with this position.
Dominique LABOUREIX
Well, my conclusion is very simple. Many, many thanks for taking the time at the end of this long day and just before the summer break to invite me for this session. As always, it's a pleasure to see that despite the technical features of what we are doing, we are able to have an informed discussion on these questions. And I would like really to thank you for that. Thank you.
Aurore Lalucq
And thank you so much for being always available to have this kind of exchange of views. Thank you so much. I hope you will have also a summer break.
Dominique LABOUREIX
It depends on our financial stability, but normally speaking, I hope to have financial stability.
Aurore Lalucq
I'm not sure if I should laugh on this. The next ECON committee meeting will take place after the summer break on September 2 and 3 in Brussels. And the coordinators will have a meeting tomorrow morning very early. And a mission in Washington next week. So thank you so much to all of you and enjoy your summer break.