MEPs have adopted new regulations on banks, supported a plan to boost investment in Europe’s economy, strengthened economic policy coordination in the EU and proposed ways to tackle tax evasion. As the European Commission is publishing on 31 May a reflection paper looking into possible scenarios for the future of the economic and monetary union, find out what Parliament has already done and what additional steps MEPs are calling for.



Reinforcing the banking system



The 2008 financial crisis exposed the weaknesses of banks and public finances in Europe. Many governments had run budget deficits even in the booming years before, but things went from bad to worse when tax revenue started to shrink and banks turned out to need public funding to stay afloat.



To ensure better oversight of banks, reduce the costs for the taxpayers and the economy, MEPs adopted legislation that made the European Central Bank directly responsible for the supervision of more than 100 of the largest banks in the euro zone. Another important concern was that small depositors holding up to €100,000 should have their deposits guaranteed and taxpayers should be the last in line to foot the bill for bank failures. With this in mind, the EU established a common authority, known as Single Resolution Board, to deal efficiently with potential bank failures.



Parliament also strengthened capital requirements for banks to make them set aside sufficient capital in order to limit the impact of future shocks similar to those in the past. Further amendments to the rules are now being considered.



Improving coordination



The European Union also took measures to ensure a better coordination of economic and fiscal policies across the EU, as lack of alignment meant that some countries were facing financial instability and had to borrow money at higher interest rates. This led to the launch of the European Semester, an annual cycle that sees the European Commission come up with policy recommendations for each EU country that are then adopted by the governments in the Council and implemented at the national level. Parliament was actively involved in preparing the required legislative packages, known as six-pack and two-pack.