The Euro is developing into the true common currency

The ruling of the German Federal Constitutional Court on 12.9.2012 cleared the way for Germany, as the final eurozone country to do so, to ratify the contract for the European Stability Mechanism (ESM). On that very day, the EU Commission presented a schedule for the consolidation of the shared Euro currency. This underpins the announcement made one week previously by Mario Draghi, the President of the European Central Bank (ECB). The Euro will be definitively defended by the ECB.

Speaking to the representatives of the European Parliament on 12.9.2012, EU Commission President José Manuel Barroso explained in his now annual "State of the Union" address, that the EU must be developed into a true economic and monetary union. The building blocks for this are to be the fiscal and banking unions.

According to the plans of the Commission, a 'Single Supervisory Mechanism' (SSM) should be established for banks in the eurozone. The ECB would function as a central and final instance for financial stability. A single and standardized supervisory mechanism, imposed on the national supervisory authorities responsible for day-to-day banking would be resided over by the European Banking Authorities (EBA). In addition, the EU parliament and the European Council have been requested to approve the Commission's three regulatory proposals for a so-called integrated banking union within the course of this year. This would establish standardized equity regulations, a harmonized deposit guarantee system and a homogeneous framework for the liquidation of banks and bank & treasury functions.

Barroso explained the plans: "Today the commission submitted proposals for a standardized European supervisory mechanism, an important step in the direction of a banking union. This new system, whereby the European Central Bank assumes a central position and the national supervisory authorities are linked, will restore the trust in the supervision of all banks within the eurozone. Ensuring that European supervision is in place until the beginning of next year should be of the utmost priority for us. This will also pave the way for any decisions regarding the use of financial security networks for the recapitalization of banks."

Meanwhile, EU Commissioner for the Internal Market, Michel Barnier, commented: "We have proposed a mechanism whereby bank supervision and financial policy within the ECB are separate from one another, and we have ensured that the ECB must give account to the European Parliament regarding supervisory decisions." Furthermore, he clarified: "Our goal is ultimately to prevent banks being rescued using tax money."

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