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Barnier admits delay to 'overdue' bail-ins

Friday 27 January 2012 - by Andrew Hickley

 EU internal market commissioner Michel Barnier has admitted he will delay proposals for mandatory bank bail-ins until "the worst of the crisis" is over.

Speaking to Bloomberg television in Davos, Barnier confirmed that it could take months for the commission to put forward its crisis management proposals, fearing that the measures could exacerbate the eurozone's continuing sovereign debt crisis.

On Thursday, Barnier said: "We have to get past the worst of this crisis to present this proposal at the right moment."

Barnier's comments are likely to infuriate Sharon Bowles, chairman of the European Parliament's economics committee, who recently admitted her frustration at the delay in an interview with Global Financial Strategy.

Bowles says she has "given up" trying to keep up with the commission's timeframe to introduce the crisis management proposals, which she says have been continually pushed back from as as early as June 2011.

The parliament unsuccessfully tried to push for draft crisis resolution measures to be put forward as part of the negotiations in setting up the European supervisory authorities, says Bowles. The commission instead decided to wait for the Financial Stability Board's proposals before coming up with its own.


"We think the whole thing is two years overdue. If you followed the parliament's timetable then we'd actually have it up and running and being useful already," Bowles said.

"We think that we should've had something that we put in place, at least in the interim, and then modified it."

The recently re-elected chairman added that the delay is impacting upon negotiations to sign off deposit guarantee legislation, which will increase the minimum amount EU bank customers are guaranteed to receive if their bank fails.

Member states are "very nervous" about finalising the amount of money they will guarantee until they know more about how the crisis resolution proposals will feed in to this, she said.

"It is actually annoying that we haven't had the two pieces of legislation running in parallel. To some extent that has contributed to a bit of a stalemate that we've got to now on the deposit guarantee schemes," she added.


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