EU summit: Compromise deal on eurozone bank supervisor
Published: 18th Oct 2012 23:22:29
EU leaders have agreed to phase in a single supervisory body for eurozone banks next year, officials say.
The deal appears to be a compromise between France and Germany, who earlier disagreed over the timing.
France and the EU Commission wanted joint banking supervision, with the European Central Bank (ECB) in the lead role, to be launched in January.
But German Chancellor Angela Merkel has been more cautious. She says national budget discipline is the priority.
Commission spokesman Olivier Bailly said there had been an "agreement on a political framework for the end of 2012 and a gradual implementation in 2013" for the new EU single supervisory mechanism (SSM) for banks.
The banking union plan is fraught with legal complications, as it would give more powers to the ECB and possibly weaken those of national regulators. There is speculation that it could lead to treaty changes - something that has caused big headaches for the EU in the past.
The UK - the EU's main financial centre - wants safeguards to protect the powers of the Bank of England.
The UK and some of the other nine non-euro states are also concerned about voting rights in the proposed banking union.
Germany is also at odds with the European Commission over the scope of the proposed ECB supervision. Under the plan, all 6,000 banks in the 17-nation eurozone would be included, but Germany wants it limited to the biggest, "systemic" banks.
Earlier, Mrs Merkel called for the EU to be given the power to veto member states' budgets. She said the EU economics commissioner should be given clear rights to intervene when national budgets violated the bloc's rules.
As the summit got under way its chairman, European Council President Herman Van Rompuy, invited all 27 leaders to attend the Nobel Peace Prize ceremony in Norway. The EU was awarded the prize last week.
"To mark this joyful occasion I hope all EU Heads of State or Government will be able to join celebrations in Oslo in December," he said on Twitter.
But Greece, the eurozone state worst hit by the debt crisis, was gripped by another 24-hour general strike on Thursday, with at least 20,000 protesters thronging central Athens, amid clashes between demonstrators and police.
With new supervisory powers the ECB would be able to intervene early on to prevent a systemically dangerous accumulation of debt on a bank's balance sheets.
And once the legal framework is in place the new permanent rescue fund, the European Stability Mechanism (ESM), will be able to recapitalise struggling banks directly, without adding to a country's sovereign debt pile.
The prize is a system that avoids huge taxpayer-funded bailouts like those arranged for Greece, the Republic of Ireland and Portugal.
The summit is taking place amid calmer European stock markets than at previous meetings and with less immediate concern over the debt crises in Spain and Greece, analysts say.
Harvard CitationBBC News, 2012. EU summit: Compromise deal on eurozone bank supervisor. [Online] (Updated 18 Oct 2012)
Available at: http://www.ukwirednews.com/news.php/1458698-EU-summit-Compromise-deal-on-eurozone-bank-supervisor [Accessed 13th June 2013]
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