Free Republic

Germany on Friday set its conditions to deepen banking union in the European Union, demanding that risks be reduced at Europe’s banks before deposits could be guaranteed EU-wide. Many EU governments such as France and Italy see a deposit guarantee across Europe as the next logical step to avoid the problems that brought on the euro debt crisis and the financial collapse of 2009. At talks in Luxembourg, the EU’s 28 finance ministers agreed for the first time to an EU roadmap towards a deposit guarantee scheme across Europe. …

MEPs on Tuesday (15 April) overwhelmingly approved the creation of a new authority and fund for failing banks—a missing element to the so-called banking union aimed at minimizing the public cost of future financial crises. The final vote on the creation of a €55 billion fund financed by the banks themselves passed with 570 MEPs in favor, 88 against and 13 abstentions, while new rules in cases where public money needs to be used for winding down banks also gathered a similar majority: 584 votes in favor, 80 against and 10 abstentions. One key concession won by MEPs from governments...

The EU has taken a step closer to establishing a full banking union with the European Parliament agreeing on a bill to see the appointment of an overarching bank supervisor. Lawmakers demanded several amendments. … Under the plan, the European Central Bank would have oversight of Europe's biggest and most interconnected banks, while national authorities would supervise the rest. …

Germany is demanding greater power on the board of the eurozone’s new bank supervisor, a politically charged request that further complicates Europe’s fractious talks on a banking union. Berlin’s proposal for voting weights to match the bigger size of its banking sector gives voice to longstanding German concerns about being outgunned under the European Central Bank’s one-country one-vote governance system. But the idea—raised privately in talks with European officials—touches on some of the founding principles of the single currency and is likely to rile smaller eurozone countries fearful of Germany’s growing willingness to flex its muscles. …

Blueprints for a European banking union to be published on Wednesday (12 September) will trigger fevered debate over the powers of the European Central Bank (ECB), if a draft leaked late last week remains unchanged. The draft proposal gives the ECB sweeping powers to carry out spot checks and withdraw banking licenses, previously the preserve of national supervisors. The ECB would assume its new duties on 1 July 2013, the paper says, taking sole authority at the beginning of 2014. The proposals—which still face months of negotiation between governments and the European Parliament—give the ECB the power “to authorize credit...

The European Central Bank will have the "ultimate decision-making authority" on supervising 6,000 euro-area banks, with some day-to-day tasks delegated to national bodies, a commission spokesman has said. "There is a clear need to cover all banks through a single supervisory mechanism for all 6,000 banks of the euro area," Stefaan De Rynck, spokesman for financial issues said during a press conference on Friday (31 August). The commission will table proposals on 12 September on granting the ECB sweeping supervisory powers to help early detection of troubled banks and force them to fix their balance sheets before having to ask...

The UK has signaled that it accepts that a eurozone banking union will go ahead and that it will not be on board, but warned it will seek "safeguards" to protect its financial sector and the single market. "A banking union for the euro area is likely to prove necessary. But it is not essential for a single market. … we are clear that Britain will not take part," says finance minister George Osborne in an article published in EUobserver and several other European media. He warns of London's concern that the euro area, having an "automatic qualified majority", will...

The US has joined ranks with EU officials exploring ways to pump eurozone money directly into Spain's troubled banks instead of having to further burden the state budget. "We were talking about the possibility that the banks, not only Spain's but also in other countries who need it, could access funds directly without intervention from the governments and without conditions," said Spanish deputy PM Soraya Saenz de Santamaria after meeting US finance minister Timothy Geithner in Washington on Thursday (31 May). "The treasury secretary indicated that we are working in the same direction and that we must find a solution...