EU Finance Ministers Set for Clash over Bank Resolution ______________________________________________ European Union finance ministers were set for another clash Tuesday over plans to centralize control of failing EU banks, with Germanys finance minister reiterating his opposition to a common resolution authority and fund. We must stick to the legal basis of the European [Union] treaty, Wolfgang Schaeuble told reporters on his way into the meeting. The commissions plan for a single resolution mechanism--the second leg in the euro zones ambitious banking union project--calls for a board that will prepare and carry out bank restructurings, backed by a shared fund, to be financed by contributions from banks. In Vilnius last month, a group of finance ministers led by Germany spoke out against that plan, warning it was on shaky legal ground and could endanger the national control of budgets. Germany has warned repeatedly that the commissions proposal would require changes to EU treaties. However, lawyers for EU member states broadly approved the legality of the commissions plan last month, though they did urge that more protection be given to national budgets. I think some countries are still debating the legal basis [of the single resolution mechanism], so well have to either convince them or find a solution, said Dutch Finance Minister Jeroen Dijsselbloem, who also acts as head of the Eurogroup of euro-zone finance ministers. Mr. Dijsselbloem suggested that a possible compromise might involve narrowing the scope of the central resolution authority so that it covered only the 130 largest banks. Alternatively, there could be a phasing in, starting with the biggest banks and gradually increasing the scope, Mr. Dijsselbloem said. Despite his reservations about the commissions plan, Mr. Schaeuble emphasized that EU finance ministers are all ready to reach a solution quickly. The first leg of the banking union project--a powerful new supervisor for euro-zone banks--is set to be finalized at Tuesdays meeting, and would then take up its duties from November 2014, Lithuanian Finance Minister Rimantas Sadzius said Tuesday. Mr. Schaeuble also warned that any move to pump European funds directly into failing lenders would face legal obstacles in Germany. He said that those people who have the impression that Germanys legal system allows bank recapitalizations with European funds are deluding themselves.
Posted on: Tue, 15 Oct 2013 10:34:36 +0000
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