In a newly revealed classified document for the upcoming EU summit, the European Union is beginning the first stage of plans to create and implement a new singular central bank. The document, which was uncovered on June 17, shows the concept of a central banking union, which would have the power to tax, receive and distribute monies across the Union, and even create and sell bonds similar to powers relegated to sovereign nations.
Translated from the Brussels jargon, the PEC – president of the European Council – report will be Herman Van Rompuy’s preliminary text of the future of “Economic and Monetary Union”. This will be circulated in sealed envelopes next week.
The separate text will set out a “roadmap” to a banking union, polling debt via some kind of eurobonds and political union via EU treaty change over the next 10 years.
Also important and controversial is will the “other financial stability measures” paper, including financial transition tax proposal and moves towards a banking union that can be taken by the EU before the end of the year. - Telegraph.co.uk
While the idea of a singular central bank for the European Union is not new, the urgency of its implementation may be the catalyst that drives its creation. Currently, several financial entities such as the ECB, IMF, and the European Commission (Troika), are all working independently to stem the growing debt problems that are plaguing sovereign nations around the Europe. Each of these independent banking facilities are dependent upon wealthy nations in the Union to backstop loans, make debt purchases, and fund financial policies and decisions. Much of the delay in finding a solution to problems in Greece, Spain, Ireland, and elsewhere, is the refusal of solvent states such as Germany and France to provide the necessary funds to deal with the issues.
Should the European Union vote to implement a central banking authority, it would take many powers away from sovereign states such as taxation, environmental programs, regulatory functions, and state run welfare. Today, the Troika is attempting to impose austerity measures on debtor nations seeking loans to fund their insolvent governments, however, the ability to deny the EU this political and economic power still remains in the hands of the states, as seen by Monday's election vote in Greece.
The world is getting smaller, and the global financial system is already intertwined to the point where a sneeze in Greece has vast ramifications to the U.S. and even Asian markets. Banking central bodies are slimlining daily, with too big to fail entities consuming more and more local and regional banks.
Europe has tough choices to make, for which they have chosen to kick the can for more than a year and a half instead of doing what is necessary. They can allow nation states in the European Union to leave, thus putting global pressure on the Euro and the Union as a while. They can print money in enough quantity to fund the insolvent PIIGS nations which are sapping prosperity from the wealthier states. Or, they can formulate a central banking facility which will control the economies of nations throughout the union, and take away power and sovereignty from the less capable countries.
In what looks to be a growing movement by leadership to create and implement a singular central bank, option three may be the primary item discussed at next week's EU summit.