EU finance ministers tackled bank sector reform yesterday, aiming to build on a eurozone deal to inject capital directly into failing lenders to prevent wider damage to the economy.
On Thursday, the 17 eurozone finance ministers agreed on how the single currency’s rescue fund, the European Stability Mechanism (ESM), could help the banks without adding to the already large debt burden on member states.
German Finance Minister Wolfgang Schaeuble said that the accord marked an “important step ... towards banking union,” the new regulatory framework for EU banks aimed at containing the fallout from any bank collapse.
Warning that the talks yesterday could prove difficult, Irish Finance Minister Michael Noonan said the deal cleared the way for discussion of the last major issues on the way to banking union.
“We have made significant progress in narrowing the ground [but] there are still some significant divergences of opinion,” Noonan said, highlighting the treatment of bank creditors.
Up to now, the taxpayer has paid for most of state and bank bailouts, but this has stoked growing unease and only added to overall debt levels.
Part of a bailout for Greece involved losses for bondholders, and this caused a crisis for banks in Cyprus.
To address the problem of taxpayers being landed with most of the costs, the EU, the European Central Bank and the IMF in March agreed on a Cyprus rescue which “bailed-in” larger depositors in its two biggest banks to pay for their restructuring.
That move shocked savers who had felt they were safe, particularly in light of the EU’s supposedly blanket guarantee of deposits up to 100,000 euros.
Noonan said the biggest issue at yesterday’s talks would be how the bail-in option would be managed, with some states wanting more flexibility to deal with it at a national, as opposed to an EU level.
The concern is if a company is bailed-in during a bank rescue, it could be weakened as a result and have an adverse knock-on effect on the wider economy.
Overextended banks have been at the heart of the debt crisis and fixing the problem through what is known as the Banking Recovery and Resolution Direction being discussed yesterday was seen as crucial.
The EU initially set up the 500 billion euro (US$665 billion) ESM to bail out member states, but in June last year, when Spain’s banks looked near to collapse, Brussels extended its scope to allow direct aid for struggling lenders.
Under Thursday’s accord, the ESM will be allowed to inject up to 60 billion euros into lenders needing help, but the figure can be reviewed later if needed.
The member state involved will also have to ensure that the bank seeking aid has a minimum 4.5 percent capital buffer and make up the difference if not, and then must make another contribution in due course.
Bank creditors, including larger depositors, will be “bailed-in.”
The ESM bank recapitalization role is tied to the Single Supervisory Mechanism (SSM) agreed last year, which centralizes regulatory oversight of the eurozone’s largest lenders under the European Central Bank.
The SSM is supposed to be backed up by a Single Resolution Mechanism, which would close down failing banks, and then a deposit guarantee system to reassure nervous investors their money is safe.
“We have a fair chance of concluding the work, it is very important in maintaining momentum on the banking union,” EU Economic Affairs Commissioner Olli Rehn said as he went into yesterday’s talks.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day