Without a doubt the many hours that European economic ministers spent trying to reach an agreement on central oversight of the region's banks was worth the effort. The result marks an historic event in Europe and secures the future of the euro, which is today more certain that it has been in several years.
At last we have an accord that echoes something that has been said more than a few times throughout the crisis: "To fix Europe, we need more from Europe." In the near term, the central supervisor represents a significant step for ending the relationship between the banking and sovereign debt crises in the region. It will oversee all financial institutions in the euro zone with more than 30 billion euros in assets under management. Practically all the Spanish and French banks will fall under this umbrella, but not so for German banks. Merkel has ensured that German savings banks, especially those with uncertain futures, will be safe from EU oversight. The impetus for creating a central regulator was the Spanish banking crisis that resulted from the past administration's poor management and Fernández Ordoñez's bad decisions at the healm of the Bank of Spain.
Germany, which has plenty of cash reserves, has only backed the central overseer when it suits their own interest. The fact that the supervisor will not begin work until March 2014 hurts Spain, because until that point Spanish banks will not be able to recapitalize directly, and the aid they receive will increase public debt even further. Schäuble made it absolutely clear yesterday that Spain should not deceive itself by believing that this will change in the future, because Spanish taxpayers will definitely have to pay for the country's financial sector bailout.
Similarly, for five straight years we stood by and watched a poorly-managed financial crisis that weakened the Bank of Spain's reputation and exacerbated the economic situation in our country. The result? Now the ECB has taken the reigns and controls our banks.
