For the avoidance of
doubt, this post was clearly meant to be lighthearted, we have pointed
out plenty of flaws and inconsistencies in the banking union proposals
both from the UK perspective and the eurozone's (see here, here and here). The idea, which we seem to have failed to express clearly, is to highlight the inconsistencies in the banking union proposals but also that a concept, weighting votes according to shares of a specific sector, which people in the UK have previously suggested and been laughed out the room for is now being suggested by Germany.
Negotiations on establishing the ECB as the eurozone's single
banking supervisor, the first stage of the much heralded (but yet to
make much progress) proposals for banking union, made little headway at
yesterday’s meeting of EU finance ministers.
As we noted on our blog last month - and reported by the FT today - Germany has been insisting on altering the ECB’s one-country, one-vote governance system by matching voting weights on the ECB's proposed supervisory board to the size of countries’ financial sectors. This would radically increase its power and ensure it cannot be held hostage to member states who have much less to lose if eurozone/EU-level banking rules don’t go their way.
Wait a minute. Should the UK not take up the Germans on their offer? Linking voting weight in the EU to
the size of member states’ financial sectors - in the European Banking Authority or in the Council for example - would immediately eliminate fears over the eurozone writing the rules for all 27 using an inbuilt majority (a scare amongst British diplomats and officials).
And in a spectacular fashion. The graph below (click to enlarge), taken from our report on EU financial
regulation, published in December 2011, charts
member states’ share of the wholesale finance market against their
voting weights under QMV. The blue column - share of wholesale finance - would represent the new voting weight under a German-style system (if it was directly proportional).
Perhaps the UK should join the banking union after all...