German Banks on Top

Germany opposes the new bank-resolution mechanism proposed by the European Commission, arguing that it must protect German taxpayers. In fact, Germany’s position is a ploy to hide its anticompetitive behavior, whereby the government subsidizes German banks and industry at the expense of everyone else – including German taxpayers.

CHICAGO – Overcoming the European Union’s current economic malaise, as almost everyone acknowledges, requires deeper integration, with the first step taking the form of a banking union supervised by the European Central Bank. But Europe’s banking union also requires uniform rules for winding up insolvent financial institutions – and this has become a sticking point.

Germany opposes the new bank-resolution mechanism proposed by the European Commission, generating moral and political support at home by portraying its stance as an effort to protect German taxpayers: Why should the German ants pay for the southern European grasshoppers? In fact, Germany’s position is a ploy to hide its anticompetitive behavior, whereby the government subsidizes German banks and industry at the expense of everyone else – including German taxpayers.

Europe’s common market has been the single greatest success of post-World War II European policy, boosting economic growth and fostering cultural interchange. But a common market requires a level playing field, and the European Commission has worked hard to achieve this in many sectors over the years.

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