|Euro zone ministers find common ground on banking union
Euro zone finance ministers said early today they made progress on a new bank regulatory system, especially on the funding of a mechanism to close failing banks before they damage the economy.
Meeting Brussels, Belgium, ministers were reluctant to give details, suggesting that differences remained, especially between France and Germany, over implementation.
“We have come a long way,'' said Dutch Finance Minister Jeroen Dijsselbloem who heads the group of 17 euro zone ministers, AFP reports.
Asked whether there had been agreement on a funding “backstop'' for the Single Resolution Mechanism which will actually close banks, Dijsselbloem said: “We have come a very long way on the backstops.''
German Finance Minister Wolfgang Schaeuble left the seven hour session with a brief comment that progress was made.
In contrast, his French counterpart Pierre Moscovici said ministers now had a “shared vision of what the SRM will be ... with backstop sources on which we can rely.''
EU Economic Affairs Commissioner Olli Rehn said the meeting had reached a “common understanding on backstops,'' hailing it as a “crucial breakthrough.''
He said this would help pave the way to the Banking Union, the new regulatory framework to police, restructure and if necessary close failing banks without the taxpayer having to foot the bill.
The SRM will work alongside the already agreed Single Supervisory Mechanism – handled by the European Central Bank – which is to oversee the top 130 euro zone banks directly, and thousands more indirectly via national authorities.
The SRM would also have a pot of cash – funded by the banks themselves – to cover the cost of winding up a failed lender.