Meseberg Agreement

First, much of the chances of success of the agreement will be determined by whether the agreed general principles are more important than the struggle for the details of implementation. Delays in the completion of the banking union, the principle of which was adopted in 2012, are a reminder that agreements on objectives do not mean implementation agreements. Next week`s eurozone summit will be a test in this regard. In the run-up to the negotiations on the multi-year financial framework, Berlin may be tempted to pit non-eurozone countries against an overly ambitious eurozone budget, arguing that a larger EU budget and a budget for the eurozone cannot be available. Banking UnionIn relation to the banking union, the Economic Council`s June 2016 roadmap recognised the need for further measures to reduce and spread risks in the financial sector in an appropriate order with regard to non-performing loans, insolvency schemes, the banking package and the fight against money laundering. BackstopThe MES should be the backstop of the single resolution fund. It should take the form of a line of credit. On the basis of sufficient risk reduction, it is expected to come into force before 2024. The size of the cooking stop should be close, but not larger than the size of the SRF. The backstop should replace the direct recapitalisation instrument.

Tax neutrality in the medium term is ensured in particular by the repayment of joint expenses by exceptional ex post contributions from the banking sector in three years, with a possible extension of two years. If sufficient progress is made in all relevant areas of risk reduction and assessed by the relevant authorities (Commission, SSM and SRB), the backstop should come into force before 2024. In 2020, the competent authorities will present a report on the evolution of non-performing loans and the establishment of a subordinate bailout cushion. On this basis and if the risk reduction is satisfactory, the Eurogroup/Ecofin/European Council should take the final decision to speed up the entry into force of the backstop. An appointment sheet containing the exact characteristics of the SRF backstop should be developed for political approval by December 2018, based on the work done so far within the relevant expert group.