Failure to secure deal on bank-capital rules
The flagship piece of financial services legislation that could have defined Cyprus’s presidency of the Council of Ministers was a new set of rules on capital requirements for the banking sector. However, Cyprus was unable to secure agreement on the regulation and directive, known as CRD IV, and this must be considered a major disappointment.
While the draft legislation was complex and divisions between the European Parliament and the Council of Ministers were not insignificant, some involved in the negotiations have criticised officials from Cyprus for a lack of impetus when the going got tough this autumn.
The two sides came closer over recent weeks, and a faint hope persists that a last-minute agreement could emerge before the end of the year. But it is much more likely that Irish officials will have the task of completing the work in the new year.
It is a sign of how difficult this dossier became that Denmark, which held the presidency of the Council of Ministers in the first half of this year, had initially hoped to reach completion by the end of its own six months in charge.
The ‘two-pack’ legislative package relating to the monitoring of member states’ budgets, and Mifid – the markets in financial instruments directive designed to overhaul financial markets in the EU – are also both unresolved, but in light of numerous and conflicting demands from different parties, Cyprus should not be blamed.
On the plus side, political agreement was reached during Cyprus’s period at the helm on an overhaul of credit-rating agency rules. There were also deals with MEPs on legislation for venture capital funds and social entrepreneurship funds. Member state approval of the banking supervision plan was a major breakthrough, but had little to do with Cypriot diplomacy.
The EU has made some progress in the realm of economic and financial legislation during the second half of 2012.
However, these small gains will have done little to reassure those who, before July, expressed concern that Cyprus would not make financial services a priority.
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