Marathon talks between European Union finance ministers have brought the creation of a central body to deal with failing banks closer to fruition. The aim is to avoid using taxpayer money to bail out or wind up lenders.
EU finance ministers moved closer to an agreement in Brussels on Tuesday to wind down troubled eurozone banks but will have to meet again on December 18 to finalize a deal.
An agreement is being sought before an EU summit to finalize the bloc’s Banking Union on December 19 and 20.
Michel Barnier, the bloc’s market regulation commissioner, spoke of having reached the “basis of an agreement” in a post on Twitter on Tuesday evening.
German Finance Minister Wolfgang Schäuble said, “We are on the way to getting this done,” adding, “But nothing is decided until all the details are decided.”
The major sticking point appears to be how to finance the fund to deal with banks in trouble. Other points of contention include the scope of the SRM and who has the final word in how a failing bank is wound up.
Germany is pushing to coordinate efforts by national authorities, while France is seeking a single EU-wide rescue fund. All EU nations appear unified in the desire to establish a method to stop the damage in the banking sector affecting taxpayer money.
The EU hopes the plan, called the ‘Single Resolution Mechanism,’ will come into play by the end of next year, at the same time as an already agreed supervisory mechanism that will directly scrutinize the top 130 or so eurozone banks.
Dutch Finance Minister Jeroen Dijsselbloem said prior to Tuesday’s talks the goals were “financial stability in our banks and making sure the taxpayer doesn’t have to put in more money every time, as soon as a bank is in trouble.”
Jörg Asmussen, an executive board member of the European Central Bank and former German deputy finance minister, said the differences had been narrowed but still tipped negotiations to extend past Tuesday. Meeting chairman and Lithuanian Finance Minister Rimantas Sadzius, however, had talked up the “strong chances” of a resolution prior to the beginning of the meeting.
French Finance Minister Pierre Moscovici said prior to the meeting there was much to be debated, but added he was hopeful of at least reaching a broad agreement ahead of further possible talks next week.
“The resolution fund has to be a genuinely single fund … with the same rules for everyone and coordinated decision mechanisms … which is capable of responding to difficult situations of bankruptcy,” Moscovici told reporters.
He added: “We are constantly moving forward. I think we have today the elements to work out a political agreement.”
ph/rc (AFP, AP)