Europe's dominant financial institution, the European Central Bank, necessitates salvation

In a significant development, the European Commission has announced a change in bank restructuring policy, with funds for recapitalization primarily coming from creditors instead of European taxpayers. This move aims to reduce the burden on public finances.

The proposed institutions to provide funds until a contingency fund established by European banks is created include national resolution authorities and, in some cases, the Single Resolution Fund (SRF). However, until this fund exists, the Eurogroup suggests that the European Stability Mechanism (ESM) should provide the contingency. This would involve European taxpayers, as the ESM is a mechanism that provides financial assistance to eurozone member states in times of severe financial distress.

The European Stability Mechanism (ESM) could potentially provide the contingency for bank restructurings until a fund created by European banks is established. This is a temporary measure, as the long-term plan is for the money needed for contingency to come from a fund created by European banks.

However, the new regime leaves much to be desired in practice due to a long list of exceptions that reduce recoverable assets. In many cases, managing without public money may still be impossible due to these reductions.

The accommodative monetary policy of the European Central Bank (ECB) will not last "years" according to Buba. This implies that the ECB may start to phase out its supportive measures, which could have implications for bank restructuring and the overall economic recovery.

The ECB's stance on the matter is not clear, as ECB President Mario Draghi has little to say, according to the current paragraph. Meanwhile, the German press does not want the publication of the ECB's minutes, which could provide more insights into the central bank's thoughts on the issue.

Greece, a country that has previously sought aid, supports the idea of new aid, but under certain conditions. The details of these conditions are not yet clear, but it is expected that they will be discussed in future negotiations.

In conclusion, the shift towards creditor-funded bank restructuring is a significant step towards fiscal responsibility in the eurozone. However, the challenges and uncertainties remain, particularly regarding the establishment of a contingency fund by European banks and the potential role of the ECB in the future.

Europe's dominant financial institution, the European Central Bank, necessitates salvation