Open

Coming up

Don't miss

Replay


LATEST SHOWS

MEDIAWATCH

Netanyahu deletes tweet featuring photo of James Foley

Read more

THE WORLD THIS WEEK

The World This Week - 22 August 2014 (part 2)

Read more

THE WORLD THIS WEEK

The World This Week - 22 August 2014

Read more

FRANCE IN FOCUS

FRANCE IN FOCUS

Read more

FOCUS

Lifting the veil over China's air pollution

Read more

ENCORE!

Tango Takeover in Paris

Read more

WEB NEWS

Calls for ISIS media blackout after execution of James Foley

Read more

IN THE PAPERS

'Steely resolve of reporters exploited by pared-down employers'

Read more

BUSINESS DAILY

US judge calls Argentina bond swap offer illegal

Read more

  • Europe launches navigation satellites to rival GPS

    Read more

  • Besieged by problems, Hollande faces unhappy return from summer holidays

    Read more

  • Iraqi Sunnis quit govt talks after mosque massacre

    Read more

  • US demands Russia withdraw aid convoy from Ukraine

    Read more

  • Rights group sues US government over ‘deportation mill’

    Read more

  • Colombian army and FARC rebels begin work on ceasefire

    Read more

  • US National Guard starts to pull out of embattled Missouri town

    Read more

  • PSG fall flat once more against Evian

    Read more

  • Fed Chair says US job market still hampered by Great Recession

    Read more

  • August 22, 1914: The bloodiest day in French military history

    Read more

  • Central African Republic announces coalition cabinet

    Read more

  • Hamas publicly executes "informers"

    Read more

  • French firebrand leftist to quit party presidency, but not politics

    Read more

  • Fear of Ebola sky-high among Air France workers

    Read more

  • US says Islamic State threat 'beyond anything we've seen'

    Read more

  • Malaysia mourns as remains of MH17 victims arrive home

    Read more

  • Turkish Foreign Minister Davutoglu set to be Erdogan's new PM

    Read more

  • Interactive: Relive the Liberation of Paris in WWII

    Read more

Europe

EU strikes deal on single banking supervisor

Video by FRANCE 24

Latest update : 2012-10-19

European Union leaders agreed early Friday to create a single supervisory body for banks across the eurozone, representing a shaky compromise between Germany and France, which have been tussling over how to shore up the bloc's banking sector.

German Chancellor Angela Merkel said Friday that a single supervisory body for the European banking sector would be created over the course of next year, adding that it must be in place before eurozone rescue funds would be made available to recapitalise troubled banks.

“We give our finance ministers the ambitious task of establishing a legal framework [for supervision] by January 1, 2013. This banking supervision will then be built up in the course of 2013,” she told a news conference on Thursday, after EU leaders reached a deal on a timetable for launching the initiative.

European Council President Herman Van Rompuy said the 27 EU leaders agreed to the plan, which will give the European Central Bank (ECB) overall responsibility for supervising the banking sector, after 10 hours of talks in Brussels.

In the future, struggling banks in debt-wracked countries that pose a danger to Europe's overall financial system could be recapitalised directly from EU bailout funds.

"A SYSTEM WHICH BYPASSES THE STATE"

“Effectively bypassing the state means that countries in trouble avoid adopting radical bailout plans and getting further into debt,” FRANCE 24 correspondent Christophe Robeet said from Brussels on Friday.

French and EU officials said all 6,000 banks in the single currency area would gradually come under ECB supervision by 2014 -- beginning with banks receiving state aid, then large cross-border institutions. Most day-to-day oversight would be delegated to national bodies.

Creating an effective banking union -- of which this deal was a first step -- is regarded by the International Monetary Fund and market economists as a key component in overcoming the eurozone’s three-year-old debt crisis.

Hollande upbeat

French President François Hollande, who described the deal as “the right compromise”, said the leaders did not discuss possible financial assistance for Spain, but he laid out a series of steps that could turn a corner in the crisis.

“Tonight, I have the confirmation that the worst is behind us,” he told a 3 a.m. news conference, adding that: “We are on track to solve the problems that for too long have been paralysing the eurozone and making it vulnerable.”

“If the December European summit confirms the decisions we took, if Greece finds a lasting solution, if Spain recovers funding mechanisms, then we will be done with a situation which weighed on markets and on the confidence in the eurozone.”

Nevertheless, the new banking supervisory body will face a host of practical difficulties.
“It’s a daunting task, because the European Central Bank will have to scrutinise more than 6,000 banks across the eurozone, and from then on, have responsibility for monitoring all those banks,” FRANCE 24’s Robeet said.

The agreement appeared to be a defeat for German Finance Minister Wolfgang Schaeuble’s efforts to delay and limit the scope of Europe-wide banking regulation.

Germany has been reluctant to see its politically sensitive savings and cooperative banks come under outside supervision. It rejects any joint deposit guarantee under which richer countries might have to underwrite banks in poorer member states.

Countries outside the eurozone – particularly Britain, which has Europe’s biggest banking sector – are concerned their banks could be at a disadvantage if a balance is not maintained between the ECB’s oversight of eurozone banks and the efforts of other authorities to oversee banks outside the single currency bloc.

High-profile disagreement

The Brussels deal came after the leaders of France and Germany held a private meeting in the wake of a high-profile disagreement over greater EU control of national budgets.

The point at which the ECB effectively becomes the bloc’s banking supervisor is important because it would open the way for the eurozone’s bailout fund to inject capital directly into troubled banks, without adding to the host government’s debt.

A French government source said the European Stability Mechanism could start recapitalising troubled banks as early as the first quarter of 2013 but a German source equivocated, saying it was “very unlikely” to happen so soon.

Merkel earlier demanded stronger authority for the executive European Commission to veto any national budget that breaches EU rules. She said a December EU summit would decide on these issues of closer eurozone economic governance.

For once the summit was not under intense pressure from financial markets, which have calmed since the ECB pledged last month to buy the bonds of troubled eurozone states to preserve the stability of the euro.

The EU leaders issued a statement welcoming Greece’s progress towards an agreement with its lenders and saying good progress had been made in putting the bailout back on track.

But in Athens, riot police fired teargas at protesters on the sidelines of a large anti-austerity rally. A 65-year-old man collapsed and died from a heart attack but it was not immediately clear if his death was linked to the sporadic bursts of teargas.

(FRANCE 24 with wires)
 

Date created : 2012-10-19

  • EUROZONE

    France, Germany clash threatens EU summit

    Read more

  • EUROZONE

    Eurozone 'very near' to end of crisis, says Hollande

    Read more

  • EUROZONE

    Eurozone unlocks €500 billion war chest

    Read more

COMMENT(S)