Supervisory Transparency in the European Banking Union
Christopher Gandrug a Mark Hallerberg (Bruegel)
Increasing transparency of bank regulation within the EU banking union has two big benefits. The first one is the growth of democratic accountability and the second one is the improvement of market performance. When responsibilities are concerned, it is necessary to consider the legitimacy of outputs and its monitoring. One option is to use the method of “fire alarm”, when the public is regularly informed and so it has the ability to switch on the “fire alarm” if it finds any problem. To make this method work, transparency becomes necessary. Due to good transparency, even investors are well informed, which has a positive effect on market efficiency. A common argument against regulatory transparency is that it can cause financial instability, but an opinion prevails here that “the more transparent the bank is, the less prone it is to crises.”
Currently, the European Union, unlike the US, does not have any system of transparency in regulation. From the eighteen countries in the Eurozone, only five of them provide data information. However, this data do not have the same qualities as the data provided by the banks in the United States. Among the EU Member States, two countries are worth mentioning: the Czech Republic, which publishes data since 2000, and Spain, which stands on an imaginary cutting edge in terms of their quality and frequency of data provided.
Capital Requirements Directive of 2013 requires banks to disclose information about their capital adequacy and risk exposure. This is a very positive step to access the data of individual banks, but it still has plenty of weaknesses. Banks can choose in what format, at what frequency and what data will be published. The authors of the study argue that the European Banking Authority should have at least though through clear guidelines for the format and frequency of bank outputs.
(The study can be uploaded here: http://www.bruegel.org/publications/publication-detail/publication/807-supervisory-transparency-in-the-european-banking-union/)
The Potential Benefits of the EU-US Free Trade Deal May Be Much Smaller Than We Have Been Led to Believe
Gabriel Siles-Brügge a Ferdi De Ville (London School of Economics – European Politics and Policy Blog)
Just before the Christmas eve in December last year, the last round of negotiations on a free trade area between the European Union and the United States was held. This agreement is primarily intended to strengthen economic growth on both sides of the Atlantic. The European leaders seem to be competing over who utters more words of praise about the package of economic measures.
However, the authors of this blog article do not share the enthusiasm of European leaders, arguing that the contract for transatlantic free trade has no significant economic stimulus. The primary purpose of the transatlantic trade and investment partnerships should be the synchronization of regulations of the European and the US economies. Nevertheless, that is the political domain and current results of transatlantic cooperation in the area of economic regulation show that the political will to take such steps is almost non-existent. Moreover, in some areas, the European and the American standards are extremely different, such as in the control of genetically modified foods.
Another danger for the successful implementation of a transatlantic free trade zone are the pitfalls of the American federal system of government. Various federal states have a variety of laws that govern economic regulation. For example, the standards for the regulation of automobile emissions vary considerably among the American states. The unanswered question remains as to whether the federal government will be able to offer a comprehensive concept that would solve this problem. The authors of this article therefore suggest that the establishment of free trade between the EU and the US is certainly not a complete solution for our economic problems, as some European politicians believe.
(The study can be uploaded here:http://blogs.lse.ac.uk/europpblog/2013/12/23/the-potential-benefits-of-the-eu-us-free-trade-deal-may-be-much-smaller-than-we-have-been-led-to-believe/)
Who Will Monitor the Spies?
Sergio Carrera, Elspeth Guild and Joanna Parkin (Centre for European Policy Studies)
The European Parliament (EP) aimed at asking the boss of British intelligence about the illegal monitoring of European citizens, which was disclosed thanks to the revelations by Edward Snowden. The British response to the European Parliament’s query was decidedly negative. They insisted that national security and the activities of state security agencies are the exclusive domain of the Member States and not the domain of the European Union, whereby the vast majority of Member States seem to hold the same position. Moreover, there is some evidence that leads us to believe that other EU countries, such as Sweden, France, Germany, operate their own eavesdropping programs.
Is the activity of national intelligence services inside or outside the competence of the EU? The authors of this article think that the European Union should have powers to intervene into this realm and they submit two arguments to support their statement. First, the EU has the power to protect the fundamental rights of data protection and privacy, and if any Member State waives these rights, it is the European institutions and European courts that must ensure justice. The European Court of Justice has the final say to decide how far the potential deviation from the European law may go. Second, the intelligence falls under the control of the European Court of Human Rights (ECHR). It is very unlikely that the ECHR would recognize the extensive surveillance of citizens by British secret services as legal. Third – to what extent can be these practices distinguished from cybercrime? Europol has an obligation to investigate cybercrime at the request of a Member State but does not have a mandate to investigate cybercrime committed by the Member States themselves. Fourth, surveillance of citizens by the secret services blurs the line between national security and matters that fall within the competence of the EU.
EU conducts its own security activities, particularly in the areas of terrorism and crime. The competences of these activities are shared between the EU and the Member States. While the security data and information from the European security agencies naturally originate from the secret services of the Member States, the European Agency can not verify the source of the information and hence whether they were obtained legally. EU would then be jointly responsible for the use of data obtained illegally, which would violate human rights. These four arguments show why the EU must be interested in how the Member States obtain information about their citizens. The authors propose a monitoring mechanism operating in the European Parliament – a committee that would establish the principles of international handling of classified information and work closely with national parliaments as a multinational forum for this sensitive area.
(The study can be uploaded here: http://www.ceps.eu/book/who-will-monitor-spies)