Tuesday, October 07, 2008

"Practically irrelevant"

We learn from the BBC that the finance ministers of the EU member states have agreed to raise the minimum level of compensation under the deposit guarantee scheme from €20,000 where it stands at the moment to €50,000.

That brought a comment from Robert Peston, the BBC's destroyer of banks and one-man rumour mill, that it was "practically irrelevant". He didn't mean it in a broader sense, but he is effectively describing the whole EU institution. Events have moved on so quickly that the EU is left floundering in their wake – as we see from the Icelandic situation where, as we have heard, thousands of British customers have had their online accounts frozen.

Actually, the BBC is being premature. The finmins haven't "decided" anything. The EU compensation scheme is set out in our old friend Directive 97/9/EC which means that all they can do is ask the EU commission to amend it.

No doubt the commission will oblige but, as a single market measure, it is co-decision, so the EU parliament must approve any changes, as indeed must the Council. How long that will take is anyone's guess. Perhaps even they can take short-cuts, as rules do tend to be flying out of the window these days.

You can get a sense of the disarray in the Council from what is described on the website as a briefing document issued by the Council presidency. If nothing else, it is a masterpiece of concision. You have to open up the document (it is only one page) to see the joke.

The picture shows Ms Christine Lagarde, French Minister for economic affairs, industry and employment – and also president of the finance minister's council. You can see that there is a fair amount of press interest but, apart from providing photo-opportunities, have the ministers anything else to offer?

  • Other posts on the financial crisis here.