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European Union officials on Tuesday approved the creation of a centralized banking supervisor, marking another step in the 28-country bloc’s long quest to stabilize its financial system. Finance ministers at a meeting in Luxembourg cleared the final legal hurdle to the establishment of the new banking supervisor, which will be operated by the European Central Bank and directly oversee the bloc’s 130 biggest banks.“Now we will start hiring supervisors, rent buildings and start the coming (bank) stress test,” ECB executive board member Joerg Asmussen said. The so-called single supervisory mechanism will be based with the ECB in Frankfurt, Germany, and...

The European Central Bank (ECB) on Tuesday (24 September) said it hired Oliver Wyman, a US-based financial consultancy, to help out with a thorough audit of the 130 largest banks in the eurozone. The review of the banks’ balance sheets and capital needs is a prerequisite for the ECB to take on a new task—that of a single supervisor (SSM) for these “systemic” banks. Oliver Wyman is a known name in the world of eurozone bailouts and bank “stress tests.” Back in 2006, it famously said the Anglo Irish Bank was the best bank in the world. Three years later,...

The European Commission wants to create a new financial backstop for ailing banks from its member countries that do not use the euro currency. The 17 EU countries that use the euro have a €500 billion fund, called the European Stability Mechanism, that they can tap to help rescue troubled banks. But the other 11 members, which include Britain, Poland and Hungary, do not. For those countries, the Commission, the 28-nation EU’s executive arm, is proposing to use an existing €50 billion ($68 billion) fund currently being used as a backstop for countries experiencing a balance-of-payment crisis, Commission spokesman Simon...

Angela Merkel vowed that she would deliver more “successful years for Germany” as exit polls indicated a commanding lead for her party over the main opposition. Angela Merkel is heading for a third term as Germany’s chancellor, as exit polls showed she could even be on course for the historic achievement of an absolute majority in the country’s parliament. An early projection by the state broadcaster ARD on Sunday evening showed Mrs Merkel’s Christian Democrat party (CDU) winning 301 seats in the 598-seat Bundestag, enough to form a government without a coalition partner. Later projections suggested, however, that she could...

A new study shows that Germany contributes less per person to the permanent euro bailout fund than residents of several other countries in the European Union. Luxembourg, Holland and Ireland are among the nations paying more per capita. … EU member states have contributed some €48 billion ($65 billion) to the rescue authority to date. The cash contribution of the ESM is expected to increase to a total of €80 billion ($108 billion) by mid-2014, with the next installment due in October. …

A financial transactions tax (FTT) for 11 EU countries would be illegal as it affects the tax sovereignty of others, according to an opinion by the legal service of the EU Council in Brussels. The European Commission says the tax is in line with EU law, however. In the leaked document, seen by Reuters and Financial Times, the lawyers serving EU member states say the proposed financial transactions tax “exceeds member states’ jurisdiction for taxation under the norms of international customary law as they are understood by the Union.” The 14-page legal opinion concludes that the proposal is “not compatible”...

European lawmakers approved legislation Thursday establishing a new, centralized oversight for Europe’s largest banks, marking what is considered a key step toward stabilizing the bloc’s financial system. The centralized bank supervision authority, which will be anchored by the European Central Bank, will be up and running next year following a thorough stress test of banks’ balance sheets. The so-called single supervisory mechanism is the first of three pillars of the bloc’s planned banking union, the cornerstone of efforts to turn the tide on the 17-nation eurozone’s three-year-old debt crisis. Its goal is to make supervision and rescue of banks the...

The Irish government says it wants the European Union to grant it a new precautionary line of credit worth a potential €10 billion ($13 billion) to ease its planned exit this year from an international bailout. Finance Minister Michael Noonan says Ireland wants the credit line only as a safeguard “to give confidence to our lenders.” …

The European Union is pushing for a more stable financial system by clamping down on “shadow banking”—the high-finance sector that handles trillions of dollars but isn’t bound by the same rules as banks. The Commission, the EU’s executive arm, said Wednesday that while investment vehicles such as money market funds or hedge funds are welcome because they provide extra sources of financing for companies and the economy, they can also pose serious threats to long-term financial stability. Analysts and economists have argued that the lack of oversight in the shadow banking sector played a major role in the global financial...

The number of Europeans who distrust the European Union has doubled over the past six years to a record high, with bailed-out Greeks and Cypriots having the least faith in the bloc, according to a new EU poll. An economic crisis, record unemployment and five eurozone bailouts have taken their toll on the standing of the European Union that last year was awarded the Nobel Peace Prize but is increasingly viewed as an overbearing, cumbersome bureaucracy.Sixty percent of Europeans “tended not to trust the EU”, according to Eurobarometer, a public opinion service of the European Commission, the EU executive, which...

Despite receiving fulsome praise from a series of EU leaders for their six month stint holding the EU’s rotating presidency, the Irish government finished the job on a sour note. A series of taped conversations between executives at the now defunct Anglo-Irish bank gleefully discussing how they put the Irish government (not to mention the rest of Europe) on the hook for their losses cast a shadow over their last week in the limelight. … German intransigence on banking union comes down to a similar rationale to that used by Berlin during the debt crisis—rules to wind down banks must...

Did you actually believe that they were not going to use the precedent that they set in Cyprus? On Thursday, EU finance ministers agreed to a shocking new plan that will make every bank account in Europe vulnerable to Cyprus-style bail-ins. In other words, the wealth confiscation that we just witnessed in Cyprus will now be used as a template for future bank failures all over Europe. That means that if you have a bank account in Europe, you could wake up some morning and every penny in that account over 100,000 euros could be gone. That is exactly what...

The head of Europe’s bailout fund says the region should eventually aim to do without help from the International Monetary Fund. Klaus Regling’s comments in Friday’s edition of Germany’s daily Frankfurter Allgemeine Zeitung add to recent hints from other European policymakers that the bloc should aim to handle future emergencies on its own. …

EU tax commissioner Algirdas Semeta has cast doubt on reports that his Financial Transactions Tax (FTT), also known as the Tobin Tax, is being unraveled by member states. The Reuters news agency and the Wall Street Journal this week cited “senior EU officials” as saying some of the 11 countries set to take part are having second thoughts. Semeta’s original proposal envisaged a 0.1 percent tax on share and bond trades and a 0.01 percent levy on derivatives trading from 1 January, designed to take €35 billion ($45 billion) out of the pockets of banks and traders into national treasuries....

France and Germany are pushing to have a full-time official lead the economic and financial policies of the 17-country euro currency bloc. … French President François Hollande and German Chancellor Angela Merkel said after a meeting in Paris that there needs to be a central figure to lead the Eurogroup. Speaking Thursday at a joint press conference, Hollande said he and Merkel “are in agreement that there should be more eurozone summits, with a full-time Eurogroup president with strengthened powers.” “We need more economic policy coordination, especially in the Eurogroup,” Merkel said. …

Police in Germany’s financial capital, Frankfurt, have ringed the European Central Bank with metal barricades a day ahead of anti-capitalist protests expected to draw several thousand people. Members of the Blockupy group say they will try to prevent employees from reaching the ECB building for several hours Friday to highlight what they say is the bank’s role in enforcing the harsh spending cuts introduced to tackle the euro area’s three-year debt crisis. A second demonstration is planned at Deutsche Bank’s headquarters nearby. … Blockupy includes people who participated in the Occupy movement, which protested the role of global capitalism by...

France’s President and Prime Minister have said Brussels has no right to tell them which economic reforms to make. Speaking to AFP on a visit to Rodez, in southern France, on Wednesday (29 May), President François Hollande said: “The European Commission cannot dictate to us what we have to do. It can simply say that France has to balance its public accounts, which is true.” … His Prime Minister, Jean-Marc Ayrault, was equally defiant at a meeting in Matignon, in northeast France, with former German leader Helmut Schmidt the same day. He said: “We will carry out reforms in our...

Retiring EU ombudsman Nikiforos Diamandouros says he has witnessed the slow erosion of a dominating culture of secrecy among the EU civil services. “[But] this in no way suggests that I am content and satisfied,” the 70-year old Greek national told reporters in Brussels on Monday (27 May). The EU Ombudsman, staffed with 66 people, is tasked to seek a fair outcome in complaints against EU institutions, to encourage transparency and to promote an administrative culture of service. … He said 40-plus years of a culture that had no concept of transparency could not be so easily swept away, even...

The recession in Europe risks hurting the world’s economic recovery, a leading international body warned Wednesday. In its half-yearly update, the Organization for Economic Cooperation and Development said that protracted economic weakness in Europe “could evolve into stagnation with negative implications for the global economy.” The OECD again slashed its forecast for the economy of the 17-country eurozone, saying it will shrink by 0.6 percent this year, after a 0.5 percent drop in 2012. The OECD had predicted a 0.1 percent decline for the eurozone in its report six months ago—and this time last year, it forecast growth of nearly...

German Finance Minister Wolfgang Schaeuble warned on Tuesday that failure to win the battle against youth unemployment could tear Europe apart, and dropping the continent's welfare model in favor of tougher U.S. standards would spark a revolution. If U.S. welfare standards were introduced in Europe, "we would have revolution, not tomorrow, but on the very same day," Schaeuble told a conference in Paris. In recent weeks Germany, wary of a backlash as many in crisis-hit European countries blame it for austerity, has taken steps to tackle unemployment in the bloc, striking bilateral deals with Spain and Portugal. "We have to...