Europe takes step closer to bank supervisor but deal hazy

Although the leaders meeting in Brussels said their decisions on the watchdog — the single supervisory mechanism — were key to shoring up lenders and eventually giving them access to loans from Europe's bailout fund, many observers were struggling to figure out exactly what had been achieved.

Rather than finding new measures to fight the crisis, the leaders focused on establishing a timeline for those they had already agreed to.

“It is good for Europe that we'll have a single supervisory mechanism up and running in the course of 2013,” Herman Van Rompuy, president of the European Council, which includes the leaders of all 27 EU countries, said Friday.

That appeared to go half a step further than the statement the EU heads of state and government adopted after all-night negotiations, which only committed to trying to get a plan for the banking supervisor in place by Jan. 1 and working in 2013 on getting it operational.

The supervisor needs to be up and running before European countries can work on the next big step in their crisis-fighting plan — giving their bailout fund, the European Stability Mechanism, the power to rescue banks directly, bypassing national governments.

That step is crucial because banks remain at the core of Europe's financial problems. Many are teetering on the brink of bankruptcy after the investments they made up in boom times — including in government bonds and real estate — plummeted in value. Some governments have stepped in to save their banks, only to worsen their own finances in the process.

European leaders want to shield troubled governments from the burden of supporting their troubled banks. That would be a huge relief to countries like Spain, which are facing the prospect of taking on enormous debts — and worrying markets in the process — in order to bail out their banks.

“The objective is simple: we want to break this relationship between the management — often the poor management — of banks and the consequences for state budgets,” Belgian Prime Minister Elio Di Rupo said as he headed into the second day of a summit meeting in Brussels.

SHARE CLOSE
Blogger		Google+
Live Journal		Plurk
Stumble Upon

Tweet

	PREVIOUS ARTICLE
	Merkel opposes retroactive bank recapitalization in union

NEXT ARTICLE
Oil down slightly ahead of EU summit conclusion

Write a Comment

Terms

Enter your comments - 3000 characters max

Type in image code

 Receive China Post promos
 Respond to this email

Submit