Briefing Influence

  • Expanded on the “double majority” principle, first proposed by Open Europe in 2011, designed to ensure a fair and level playing field between euro and non-euro countries.
  • Double majority voting now applies to the European Banking Authority, having been adopted by EU leaders in December 2012.

13 October 2012

UK share of wholesale financial markets 36%
UK Share of QMV voting weights 8.2%
UK Share of MEPS 9.7%

Institutional bias against the UK in single market regulation

The UK is home to over 36% of the wholesale finance market, but only accounts for 8.2% of the voting weights within the Council of Ministers – where the bulk of EU legislation is passed. This institutional bias against the UK is set to increase. Open Europe was the first to highlight that under new voting rules coming into place in the European Council in November 2014, the Eurozone will gain a qualified majority, meaning that it will be able to outvote non-Eurozone members. If it votes as a bloc, the Eurozone may pass EU-wide laws that non-euro states cannot stop, leading to the risk of a single market fracture.Source: Open Europe

Open Europe’s double majority principle will prevent the risk of Eurozone caucusing

The Eurozone will in future have greater incentive to take a common position on banking matters, unlike non-Eurozone countries. First, to avoid free riding on future potential joint backstops for banks, a greater degree of regulatory harmonisation within the Eurozone may be needed, which could spill over to the single market. Secondly, under the EU’s new voting rules, the Eurozone will have an inbuilt majority in EU decision-making from 2017, including in the EU’s financial supervisors such as the European Banking Authority.

Double Majority to ensure the integrity of the single market

To avoid the balance of power at the European Banking Authority  (EBA) being tipped in favour of the Eurozone, much stronger safeguards are needed than those that were originally proposed by the European Commission. Instead, Open Europe’s principle of ‘double’ Qualified Majority Voting (QMV) should be introduced. At the request of one national supervisor, this would see two separate votes taking place when the EBA considers a key decision: one amongst euro countries and a separate one amongst non-euro members. If a weighted majority cannot be achieved in both groups, the proposal should fall.

This would deter Eurozone caucusing and establish a positive principle for how to safeguard the single market in financial services more broadly. It should therefore be in the interest of both Eurozone and non-Eurozone members.

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