EU finance ministers struggle to agree on bank-failure plan
Talks in Brussels cut short after division on basic principles persists
European Central Bank president Mario Draghi, Minister for Finance Michael Noonan, France’s finance minister Pierre Moscovici and European Union Economic and Monetary Affairs Commissioner Olli Rehn attend an eurozone finance ministers meeting in Brussels. Photograph: Francois Lenoir/Reuters
European Union finance ministers struggled to advance a bank-failure plan for the euro area today, hampered by the interregnum in Berlin and persistent divisions on basic points.
Ministers will be pressed to meet a year-end deadline to broker an accord after cutting short talks in Brussels today.
The bloc’s 28 nations are split on who should be the ultimate decision-maker in the planned Single Resolution Mechanism, whether it should be backed by a central fund and which banks should be covered.
Today’s discussion “proved that today we still do not have agreement, so it was absolutely senseless to sit overnight, because there’s still no way to get this final agreement,” said finance minister Rimantas Sadzius of Lithuania, which holds the EU’s rotating presidency.
The Single Resolution Mechanism is part of a euro-area effort to break the financial links between sovereigns and banks by centralizing oversight and crisis management of failing lenders.
The proposal, presented in July by Michel Barnier, the EU’s financial services chief, initially met with a barrage of complaints from governments.
EU leaders nevertheless reaffirmed last month that nations should agree on a common stance by the end of this year and called the plan is an essential complement to European Central Bank supervision of euro-area lenders, which begins in a year.
German finance minister Wolfgang Schaeuble called on his colleagues to rein in their ambitions for the SRM, including the proposed central fund.
He has said Mr Barnier’s centralized blueprint should be scrapped in favour of a network of national authorities without a common fund, on the basis that further steps can only be taken once changes are made to the EU’s basic treaties.
Today’s debate “showed that of course we can’t get a perfect solution on the basis of current treaties,” Mr Schaeuble said.
He noted a “deepened understanding” among his colleagues that a sound legal basis for any resolution system “is necessary not only from a German point of view.”
German chancellor Angela Merkel’s Christian Democratic bloc is in talks with the Social Democrats to form a so-called grand coalition government, almost two months after Ms Merkel’s party won the largest share of the vote in parliamentary elections.
“As long as there is no government in Germany I don’t see progress,” Dutch finance minister Jeroen Dijsselbloem said.
The barriers in the way of making progress at today’s gathering led Mr Sadzius to scale back plans for a series of one- on-one meetings with finance ministers, shortening the meeting by several hours. A planned dinner was also cancelled.
Mr Sadzius said that he would seek a political deal on the plans at the ministers’ next meeting on December 10th.
Minister for Finance Michael Noonan raised the prospect that finance ministers may have to convene again after that meeting to get a deal.
“It seemed to me that there’s a lot of goodwill to get decisions taken in December, and it’ll be up now to the Lithuanian presidency to do that at the regular meeting or to do it at a special meeting,” Mr Noonan said.