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Banking Union part II – now for the safeguards
Open Europe Blog

What the Dutch elections could mean for Europe and the euro 
Open Europe Blog

While everyone is talking bond-buying, here's the full (leaked) proposal for an EU Banking Union
Open Europe Blog

Daily Press Summary

EU banking union proposal to strengthen role of the EBA through panel of “independent experts”Open Europe has published the second part of the Commission’s leaked proposal for an EU banking union which will officially be tabled on Wednesday. The proposal amends and strengthens the powers of the European Banking Authority, allowing it to over-rule the ECB in “emergency situations”, through the establishment of an “independent panel” of experts whose decision can only be over-turned by a simple majority at the EBA’s supervisory board, which needs to include at least three votes from non-euro members. Reuters reports that the UK might want stronger safeguards to ensure the single market isn’t undermined. The FT reports that Germany is pushing for the ECB to directly supervise the 60 most systemically important banks in the eurozone, not all banks as the Commission wants.
Open Europe blog: EU banking union Commission proposal amending EBA Reuters FT EUobserver

German Constitutional Court ruling to proceed tomorrow as planned;
Gideon Rachman: Sight of German representative on the ECB being isolated and outvoted should be “chilling”The German Constitutional Court has confirmed this morning that it will announce its verdict on the constitutionality of the ESM and the fiscal treaty tomorrow as originally planned, with the judges rejecting a last minute appeal by the CSU MP Peter Gauweiler to take into account the decision of the ECB to launch a new bond-buying programme. Writing in FAZ, Joachim Jahn argues that while hardly anyone believes the Court will block the treaties, the judges may set a maximum liability limit for Germany.

Writing in the FT, Gideon Rachman warns that “for anyone with a sense of history, the sight of the German representative on the ECB being isolated and outvoted should be chilling. Since 1945, the central idea of the European project was never again to leave a powerful and aggrieved Germany isolated at the centre of Europe. We are now dangerously close to that point.”
Reuters Bild Bild 2 FTD Süddeutsche Welt FAZ FAZ: Jahn Sole 24 Ore Sole 24 Ore 2 Le Monde FT: PeelFT: Rachman

Open Europe briefing: What the Dutch elections could mean for Europe and the euroOpen Europe has published a briefing looking at tomorrow’s Dutch elections, noting that, “The most likely outcome remains a centrist, pragmatic coalition, which clearly is the preferred option in Brussels and Berlin. The Dutch elections are therefore unlikely to radically change the immediate political dynamics of the eurozone crisis in the short-term.” In the medium to long term, however, “with future decisions on potential eurozone debt pooling to come and the prospect of more EU powers over national budgets (including the Netherlands’), Dutch public opinion and the more or less EU-critical parties such as the Socialists and Geert Wilders’ PVV are likely to shift the country in a more sceptical direction.” The briefing was cited by ZeroHedge and the Guardian’s live blog.
Open Europe briefing BBC Sole 24 Ore NOS Volkskrant ZeroHedge Guardian: Live Blog

Rajoy suggests Spain will not decide on EFSF/ECB bond-buying until October, rejects new conditionsIn an interview with Spain’s public broadcaster TVE yesterday, Spanish Prime Minister Mariano Rajoy suggested that he wants to wait until the next meeting of EU leaders on 18-19 October before making a decision over whether to request that the eurozone’s bailout funds or the ECB start buying Spanish bonds. He said of the possibility of Spain being imposed new conditions in return for bond-buying, “I could not accept that they tell us the specific policies in which we have to make cuts”, adding that pensions will not be touched. Separately, Bloomberg reports that German Finance Minister Wolfgang Schäuble told CDU MPs that Spain doesn’t need a full sovereign bailout, according to two party officials who attended the meeting.
IHT EUobserver El País El Mundo Cinco Días Expansión El País 2 El País 3 Cinco Días 2 Expansión 2Bloomberg WSJ

Troika rejects close to half of Greek government’s suggested budget cuts;
Greece sets up working group to tally outstanding WWII reparations from GermanyKathimerini reports that only €6bn of the proposed €11.5bn in cuts presented by the Greek government have been accepted by the EU/IMF/ECB troika, with the group calling for further public sector job and pension cuts as well as increases in the retirement age.

The FT reports that Greek Prime Minister Antonis Samaras may ask the ECB to refund profits on its holding of Greek bonds when he meets ECB President Mario Draghi in Frankfurt today. Nomura estimates that Greece could receive €3.1bn in 2012, €2.4bn in 2013 and €2.3bn in 2014 from such a programme. A separate article in Kathimerini notes that Greece has set up a ‘working group’ to scour historical archives and tally how much Germany might owe in outstanding reparations from World War II, the finance ministry announced yesterday.
Kathimerini FT Kathimerini 2

According to latest figures produced by ISTAT, the Italian statistical agency, Italian GDP has decreased by 2.6% in the second trimester of 2012.Corriere della Sera Le Monde Repubblica La Stampa

In its annual report on the Irish economy the IMF gave its support for the Irish bank bailouts to be transferred off state books using the ESM, the eurozone’s permanent bailout fund.Irish Times Irish Independent FT

Handelsblatt reports that according to the SPD, Germany has a direct exposure of €310bn to the eurozone crisis, in the form of guarantees, although the party’s budgetary spokesman Carsten Schneider notes that in the event of a eurozone break-up the risks could top €1 trillion.Handelsblatt

The Sun reports that Work and Pensions Secretary Iain Duncan Smith yesterday vowed to “protect our benefits system” after the European Commission launched a legal action to force the UK to axe its right to reside rules.Open Europe research

The British Government has no intention of raising VAT on energy efficiency products from 5% to 20%, Climate Change Minister Gregory Barker has said, bypassing a ruling of the European Commission that urged the UK to bring its legislation into line or be sued at European Court of Justice.Euractiv

Reuters reports the European Commission will make a U-turn on its biofuel policy by restricting subsidies for production and limiting the use of the use of crop-based fuels.Reuters

Conservative MPs and activists have set up a new campaign group, Conservative Voice, with one of its objectives to win back Conservative voters who have switched to the UK Independence Party, the Telegraph reports.Telegraph Telegraph: Porter Conservative Home