EMF control must be at the European level

A paper by the parliamentary group of the CDU/CSU, the leading bloc in Germany’s government, has said that fund distribution from a proposed European Monetary Fund should be controlled by the eurozone’s national parliaments. Such a measure would all but nullify the point of creating the EMF — and be a dire signal for hopes of further eurozone integration.

  • By Craig McGlashan
  • 17 Apr 2018
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In a December European Commission proposal on transforming the European Stability Mechanism into a European form of the IMF, dubbed the EMF, the need for such a move is made explicit.

“Experience has shown that it is difficult and cumbersome to articulate a collective action of the Member States with the competences of economic policy coordination conferred on the Union,” reads the proposal. 

Later, it says: “Since even minor modifications rely on the signature of all contracting parties at the highest political level, the approval of the national Parliaments may be necessary to modify them. Those procedures are time consuming and may prevent taking action at the time when it is needed.”

The Commission — perhaps unsurprisingly for those who believe Brussels always wants more power — much prefers such powers to be at the European level.

“The EU legal framework, on the other hand, offers a potential range of methods for modifications of existing acts, with their complexity corresponding to the seriousness of the issue in question and the form of the measure to be adapted,” the proposal later reads. “Application of an EU decision-making framework would therefore make the process of adjustments of relevant provisions faster, if needed. Greater synergies and a more streamlined decision-making would strengthen governance and procedures.”

While Eurosceptics might feel that the very mention of the word “streamlined” in a conversation about the EU is an oxymoron, anyone who believes that an EMF is at all desirable must agree that it should be governed on a European level and not held hostage to the whims of national parliaments. 

As the proposal demands: “The EMF shall be accountable to the European Parliament and to the Council for the execution of its tasks.”

Sinking the idea

With that in mind, it is hard to see that CDU/CSU paper as anything more than an attempt to sink the EMF idea — and, further, that of closer European integration.

This is a dangerous game. The beat of the populism drum may not seem as infectious as it did last year, when Marine Le Pen threatened to take the French presidency, but it is far from silenced.

Creating a strong and — just as importantly — nimble EMF that can deal swiftly with the next challenges that the eurozone faces is just as important as all the other work that has been done to shore up the bloc since the crisis.

When compared with other moves towards integration mooted by the Commission, such as common eurozone bonds, evolving the already well-established ESM into an EFM seems like an easy win.

Jean Monnet, a founding father of the EU, famously said that “Europe will be forged in crises”. 

It’s time for the continent’s leaders to learn that, until all the weaknesses exposed by those crises of the last few years are resolved, the EU will be in perpetual crisis — no matter how good the economic figures look or how poorly populist parties perform in the polls.

  • By Craig McGlashan
  • 17 Apr 2018

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
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1 Citi 66,398.25 210 8.43%
2 JPMorgan 62,989.04 222 8.00%
3 Barclays 53,876.84 175 6.84%
4 Bank of America Merrill Lynch 44,675.83 159 5.67%
5 Deutsche Bank 42,359.23 156 5.38%

Bookrunners of All Syndicated Loans EMEA

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1 Bank of America Merrill Lynch 6,160.68 5 15.90%
2 Deutsche Bank 3,400.72 4 8.77%
3 Commerzbank Group 2,532.05 5 6.53%
4 Citi 2,513.95 6 6.49%
5 BNP Paribas 1,742.18 7 4.49%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
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1 UBS 998.25 3 13.32%
2 Citi 693.55 2 9.26%
3 Morgan Stanley 572.72 3 7.64%
4 Bank of America Merrill Lynch 509.34 3 6.80%
5 Jefferies LLC 409.89 4 5.47%