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      Good things are worth waiting for

      Good things are worth waiting for

      According to Luc Frieden, Luxembourg Minister of Finance, a European banking union only makes sense in combination with a European resolution system and a deposit guarantee scheme. The banking union will likely be implemented in January 2014.

      “Today, the supervision of European banks is very good, but we can improve it”, the Minister said in Sao Paulo on the cusp of the official mission to Latin America. “If Europe wants to be credible and create trust, the measures to be taken to deepen and strengthen Europe need more time. It’s a whole array of small steps that at the end of the day will secure investors.” The banking union still is in its infancy and will be discussed at today’s EU summit.

      Mr Frieden underlined that more fiscal and economic integration is needed in order to deepen Europe’s unity. Solving the problems of European Member States is currently a priority. Eurobonds would be a logical next step following the implementation of financial integration. “First, we have to reduce debt in order to reach fiscal consolidation. Eurobonds stand at the end of this process, not at the beginning.“

      The role of the ESM (European Stability Mechanism), one of the recent measures taken to bring the Eurozone back on track, is somewhat limited. “The ESM cannot help banks that already have problems. A single supervising mechanism will not automatically lead to the recapitalisation of banks. It is a precondition that the ESM is able to recapitalise banks, but not its only function”, the Minister explained.

      Regarding an extra financial injection for Greece in the short-term, the Minister made it clear that prior to a new tranche being paid, Greece has to show how well it has implemented the conditions of the so-called "Troika" of European Commission, European Central Bank and International Monetary Fund. “The question is not, how much more time can we give Greece, but how much more money will this cost? Supporting Greece is, of course, in our common interest. The goal is to help the country become sovereign again, thus any measures that can help and are not too costly should be supported. It’s not only about paying a tranche; it’s about what will happen after paying it.”

      Despite ongoing discussions about the value of the Euro, Mr Frieden is confident that the European means of payment will survive: “I have trust in our currency. The euro is here today and will still be here tomorrow.” Again, the return to a stable European currency will be the outcome of fiscal consolidation that will pay off in the long term.

      Furthermore, the Minister announced that after a meeting with the Mexican Minister of Finance, Luxembourg has once again been added to the Mexican white list with retroactive effect as from January 2012. EA