FXstreet.com (Barcelona) - In order to achieve the completion of
EMU, the 27-countries bloc made further progress on the roadmap to
achieve such goals, after the agreement for a Euro bank supervisor
by the ECB earlier on the week, which will police north of 200
flagship banks.
Today's European leaders meeting, which again concluded over 2
hours past midnight Brussels time, showed some understandable
differences on how to go about the next critical steps, such as a
banking resolution, measure to reduce country's deficit and a
budget for the whole bloc.
One of the notorious opposed members to see mutualisation of the
debts after the ECB bank's oversight role, was German Chancellor
Angela Merkel, who continues to play it safely against passing new
liabilities for German taxpayers ahead of next year's national
elections.
As Reuters notes, "a German delegation source said that in the
summit room, she opposed a joint resolution fund for banks at this
stage and rejected any big "fiscal capacity" to help euro zone
states cope with economic shocks or reward them for structural
reforms. Instead, she said EU countries should concentrate on
consolidating their own budgets, according to notes of the meeting
and an account provided by one participant."
Merkel, once out of the official meeting, told reporters that the
bank union deal was a 'very important' decision taken by the EZ
leaders, and that such agreement paves the way for future positive
developments of a currency union. On the transaction tax, she
suspects a solidarity fund for Euro zone states with limits 10 to
20 billion Euros
Also understandable was the reported approach by Spain and Italy's
prime ministers, countries that continue sunk in a harsh
austeritarian path while battling against an undesirable 5-6% yield
on their 10-yr paper; both Mr. Rajoy and Mr. Monti tried to gain
their counterparts's support in order to beef up funding in
exchange for the discipline in economic reforms so far.
French president Mr. Hollande said once the summit came to an end
that direct bank recapitalization in 1H 2013 would come under
conditions, although reassuring that the bank supervisor will be up
and running by March 2014, a somewhat contrarian two lines.
Hollande added that the ECB regulation will most likely cover 95%
of the French banking sector, while is expected to oversight as
much as 82% of German banking.
EU's Juncker, during a brief speech in the conference room,
mentioned that EU leaders were divided over the 'solidarity
mechanism' with 'controversial' issues having to be resolved during
the morning. Meanwhile, ECB's Draghi said progress was made on
resolution mechanism.