EU finance ministers reach banking union deal
By Bryan McManus, AFP
December 20, 2013, 12:09 am TWN
BRUSSELS--EU finance ministers Wednesday reached a banking union accord which will hand Brussels unprecedented new powers to prevent failing banks from wrecking the economy, official sources said.
“Today is a momentous day for banking union,” EU Financial Markets Commissioner Michel Barnier said after some 12 hours of tough talks.
“We are producing revolutionary changes to Europe's banking system so that taxpayers will not foot the bill in banking crises, ending an era of massive bailouts,” Barnier said.
Crucially, it will promote “financial stability ... so that banks can lend to the real economy” again, helping produce much-needed growth and jobs, he said.
Ministers formally agreed on what is known as the Single Resolution Mechanism which will close failing banks before they do too much damage.
It forms the banking union along with an already agreed new supervisory regime to be overseen by the European Central Bank.
The last element, establishing a common deposit guarantee system, was put in place Tuesday following agreement with the European Parliament.
The banking union was drawn up in response to the financial and then debt crises which brought down many banks and nearly drove the eurozone to its knees as governments had to be bailed out after rescuing their lenders.
Huge Transfer of Power to Brussels
The new framework means a big pooling of sovereignty and would mark a big step towards EU cross-border authority.
All 17 countries — shortly to be 18 — sharing the single currency will be bound to the scheme while other states in the EU have the option of joining.