Banking resolution mechanism by middle of year, says Barroso

Wed, Jan 16, 2013, 00:00

The European Commission will propose a euro zone mechanism for winding up failed banks by the middle of the year, commission president José Manuel Barroso said yesterday.

EU officials see the move as the first step towards a fiscal union.

The so-called resolution mechanism will take the euro zone close to completing the banking union needed to address some of the causes of its sovereign debt crisis and help improve lending by banks to the real economy to support growth.

The euro zone took the first step to banking union in December when, after a fierce debate, ministers agreed to create a single supervision mechanism (SSM) for euro zone banks, under which national supervisors cede some powers to the European Central Bank.

The negotiations on a bank resolution mechanism will be even more difficult, officials say.

“Following the adoption of the SSM, the commission will make a formal legislative proposal for a single resolution mechanism in the banking sector before the summer,” Mr Barroso told the European Parliament in Strasbourg yesterday. – (Reuters)