German Finance Minister Wolfgang Schaeuble comments on the future direct recapitalization of banks by the European Stability Mechanism, the Single Supervisory Mechanism for European banks, the German legislative process for the transfer of banking supervision powers and the domestic political situation in Greece.
He spoke to reporters after a meeting of euro-region finance ministers in Luxembourg yesterday.
On bank recapitalization and the SSM:
“We’ve taken an important step on the way to the banking union by having reached agreement on the main points for the future rules for the direct recapitalization of banks.”
“The main question was, and a lot remains to be done on this point tomorrow, that the liability cascade -- bail-in, the role of of member states, the fact that the ESM can only be the lender of last resort under tight conditions -- that we regulate that very clearly, that the future resolution and restructuring directive rules have the same content as the bail-in rules we set for the direct bank recapitalization. We have agreed on that in principle.”
“We must avoid direct bank recapitalization raising false expectations. It’s nonsense if some have the expectation that any bank that needs capital can just go to the ESM.”
“The bail-in rules of the future resolution directive will be applied as soon as the SSM has started with bank supervision. Before that there won’t be direct bank recapitalization.”
On Germany’s legislative process for the transfer of bank supervision powers:
“Germany has to make sure that the European treaties are adhered to. We can’t go beyond the European treaties, not even with a generous interpretation, because the rules set by the constitution are absolutely clear.”
“We all wish that doubts related to Greek domestic political difficulties can be overcome quickly. Greece has a difficult road to travel. Greece is traveling that road with more determination than most had thought it possible a year ago. It’s clear that it’s not easy for the population to do what’s necessary.”
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