Euro zone agrees new bank rules
Europe clinched a deal last night to give the European Central Bank new powers to supervise euro zone banks from 2014, embarking on the first step in a new phase of closer integration to help underpin the euro.
Taoiseach Enda Kenny is also travelling to Brussels for the seventh and final EU summit of the year.
After more than 14 hours of talks and following months of tortuous negotiations, finance ministers from the European Union's 27 countries agreed to hand the ECB the authority to directly police at least 150 of the euro zone's biggest banks and intervene in smaller banks at the first sign of trouble.
"This is a big first step for banking union," EU Commissioner Michel Barnier told a news conference. "The ECB will play the pivotal role, there's no ambiguity about that."
The euro rose to a session high in Tokyo of 1.3080 against the US dollar on news of the deal.
After three years of piecemeal crisis-fighting measures, agreeing on a banking union lays a cornerstone of wider economic union and marks the first concerted attempt to integrate the bloc's response to problem banks.
The new system of supervision should be up and running by March 1st, 2014, following talks with the European Parliament, although ministers agreed that could be delayed if the ECB needed longer to prepare itself.
The plan sets in motion one of the biggest overhauls of any European banking system since the financial crisis began in mid-2007 with the near collapse of German lender IKB.
The onus is now on EU leaders, who meet in Brussels on Thursday and Friday, to give it their full political backing.
In an about-turn, German finance minister Wolfgang Schaeuble dropped earlier objections that had led him to clash openly with his French counterpart, Pierre Moscovici, last week over the ECB's role in banking supervision.
With time running out to meet a year-end deadline, both sides managed to settle their differences and Germany won concessions to temper the authority of the ECB's Governing Council over the new supervisor.
Agreement on bank surveillance is a crucial first step towards a broader banking union, or common euro zone approach to dealing with failing banks that in recent years dragged down countries such as Ireland and Spain.
The next pillar of a banking union would be the creation of a central system to close troubled banks.
The decision also sends a strong signal to investors that the euro zone's 17 members, from powerful Germany to stricken Greece, can pull together to tackle the bloc's problems.
Other difficult issues remain. At a summit in June, EU leaders pledged that once a common bank supervisor was in place, the bloc's rescue mechanism would have the power to directly recapitalise struggling banks.
Countries like France, Italy and Spain are keen for those powers to be in place as soon as possible. But Germany, worried it could be forced to foot the bill for struggling banks across the bloc, is not in a rush.
"We have reached the main points to establish a European banking supervisor that should take on its work in 2014," Mr Schaeuble told reporters. "We stand by what we agreed, to bring Europe forward step by step."
In the longer term, there is also disagreement over how the burden of winding down failed banks should be shared.