Eurogroup finance ministers to meet in Luxembourg

Eurogroup finance ministers meet today in Luxembourg to discuss Eurozone stabilization and recovery policies in the wake of the COVID-19

Francois Lenoir REUTERS

Photo: Francois Lenoir/REUTERS

Eurogroup finance ministers meet today in Luxembourg to discuss Eurozone stabilization and recovery policies in the wake of the COVID-19 pandemic.

Initiated in 2012 as a response to the Eurozone debt crisis, the banking union seeks to unify and harmonize European banking systems to shield the Eurozone from future financial crises. The Eurogroup therefore seeks to establish a “stepwise and time-bound work plan needed to complete the Banking Union” following their own statement.

Expect today’s Eurogroup’s discussions to revolve around enhancing current initiatives, such as the Single Supervisory Mechanism and Single Resolution Mechanism, aimed at homogenizing European financial regulations. The omission of adopting common banking standards along with an EU-wide supervisory and resolution mechanism weakens the Eurozone’s resilience against a possible pandemic-induced sovereign debt crisis.

These developments coincide with the European Commission’s recent provision of “Coronabonds” intended to finance pandemic recovery funds by issuing common Euro bonds on capital markets. As such, with traditional critics of the banking union such as Germany conceding to the Commission’s increasing use of common debt financing, expect the development of the EU banking union to be accelerated as a top EU policy priority.

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