Why A European Banking Union Is Far From Imminent
The implicit risk transfer from periphery to core - and loss of sovereignty this assumes - that is inherent in any banking union (or Euro-FDIC) is not just a stumbling block for the Germans, Finns, and Brits; without fiscal integration it is a non-starter (which no matter how much chatter or 'coming soon'-phrases we see, is not occurring within weeks/months given the Treaty changes and ratification required). Stratfor's Adriano Bosoni does an excellent job of summarizing the short- and long-term hurdles and implications of what so many of the 'poor' nations are calling for (and yet seem not to comprehend). The proposals all involve a transfer of funds from the center to the periphery and all involve a loss of national control of different aspects of their economy. The ceding of authority to unelected officials in Brussels that will be required may seem like a compromise the desperate Spanish leaders (for example) are willing to take in the short-term. In the long-term, the loss of control over the budget and banking sector would leave the nations under the authority of an external force - a concept that threatens the very existence of the nation state as we know it today. This key contradiction between EU integration and national sovereignty undermines the European project from its foundations.
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