- POSTED: 18 Dec 2013 23:51
This graph is an experimental feature that tracks number of views over time.
EU finance ministers battled on Wednesday to nail down a final deal on a banking union handing Brussels unprecedented new powers to prevent failing banks from wrecking the economy.
BRUSSELS: EU finance ministers battled on Wednesday to nail down a final deal on a banking union handing Brussels unprecedented new powers to prevent failing banks from wrecking the economy.
The banking union plan was drawn up in response to the financial and then debt crises which brought down many banks, and which nearly drove the eurozone to its knees as governments needed to be bailed out after rescuing their lenders.
The new emerging framework involves a big pooling of sovereignty and would mark a big step towards EU cross-border authority, explaining in large part why the talks have taken so long to get this far.
"There are some issues open but I think we'll be able today to make a deal, a fair deal, a deal that can be put before the European Parliament," said Lithuanian Finance Minister Rimantas Sadzius, whose country holds the rotating presidency of the EU, as he arrived for the talks.
Determined to prevent a repeat of the crisis, the European Union aims to put in place a system to regulate banks and close down failing lenders.
The first element, called the Single Supervisory Mechanism (SSM), is to police the banks, and is part of the European Central Bank.
The already agreed SSM will work with a Single Resolution Mechanism (SRM) -- one of the main sticking points at the talks -- which will stabilise, and if necessary close a failing bank.
The SRM will be backed up by its own fund -- another bone of contention -- to be paid for by bank contributions and which will cover the cost of closures.
Combined, the system is meant to ensure that taxpayers no longer have to foot the bill for banks which get into trouble through taking on too much risk.
Finance ministers from the 28-country bloc arrived on Wednesday positive that they can clinch an overall deal, citing progress at a late-night meeting of the eurozone nations.
A deal with the European Parliament on a deposit guarantee scheme to protect savers -- the third element of Banking Union -- also boosted morale.
"Tonight, we will leave, I am certain, with a decisive agreement, a historic agreement," French Finance Minister Pierre Moscovici said,
Eurogroup chief Jeroen Dijsselbloem was also upbeat, saying: "The outline of compromise on all these issues are beginning to come clear."
European Commission chief Jose Manuel Barroso urged ministers to reach a deal, saying: "I think that with a little bit of the spirit of Christmas compromise we can do it."
Ministers need to reach a deal so it can be submitted for approval to an EU leaders two-day summit from Thursday.
Deep divisions especially remain over who should have the last say over when a bank needs to be wound up, while there are continued differences over how the SRM fund should be phased in and what finance it can expect in the interim.
Germany favours national governments having the final word in the SRM while France believes the European Commission, the EU's executive arm, should be in charge.
German Finance Minister Wolfgang Schaeuble suggested that compromises can be made, saying "in essence, we are here to find solutions" on the issue of interim funding.
Swedish Finance Minister Anders Borg meanwhile warned the banking union is not a magic bullet that will give Europe the boost it needs to its struggling economy.
"This seems to be... a complex banking union. I'm a bit worried it will not give a confidence boost to the recovery of the European economy," he said.
An agreement is needed by year's end to enable the adoption of legislation before European Parliament elections in May and the replacement later in the year of the European Commission.
The Parliament has been critical of many aspects of banking union and subsequent discussions on its final shape are likely to be as difficult as those up to now.