ECB lending to buy time for... what?

The European Central Bank's announcement that it would buy Eurozone government bonds is a massive boost to the Eurozone, but a lot remains to be done before we can say that the Eurozone is starting on its path out of the crisis. The banking union legislation will be a key part of the agenda over the next months (the Commission should publish a draft law on banking union next week), and it is vital in separating the link between national banks, which have grown as part of an EU-wide financial system, from national governments, many of whom are simply too small to support such large financial sectors.

However like most initiatives banking union focuses on preventing similar problems next time - in order for it to have an appreciable effect on today's crisis there would need to be a deal on old banking debt that has been taken on by national governments, in particular Spain and Ireland. (The Fiscal Stability Treaty, the six pack and the yet-to-be-passed two pack share this weakness too). Could this be agreed? Would there be joint liability for debt already generated and taken on by national governments (that the ECB pressured the protection of banks to ensure the stability of the system means that there was also a European interest in these national financial systems from early on in the crisis too)? It's a highly political area and the Irish government - and no doubt Spain too - are eager to reduce their debt as far as they can while avoiding austerity.

But it's not just in Ireland and Spain's banking case that the debt question is posed (though they raise the spectre that rigid application of public debt rules bear little relation to the ability to weather economic crises), since debt and economic growth is a European question. So what is the ECB buying time for: for an agreement on economic union? How far should economic union be extended? If debt needs to be shared to ease the burden and to provide breathing room for reforms and recovery in the most crisis-hit countries what kind of institutions do we need, and how do we make them accountable?

Merkel has signalled that she wants a convention by the end of the year to decide on the future of the EU, and apparently France and Germany are moving closer together on political union. Barroso has also called for a EU Treaty "renewal". There's very little detail on what is meant by different people about economic or fiscal union, so it's hard to get a debate going it. It's likely that the only debate we'll get is on the results of a convention - hardly a good way to build such a union or to build support for it. In any case Barroso is supposed to put forward some ideas in his State of the Union speech on September 12th. If he does put some ideas on the table, it could be one of the few opportunities for civil society to study the up-coming integration debate.