Deeper eurozone union 'agreed'
Friday, 14 December 2012 11:48
Deeper eurozone union 'agreed'The leaders met for two days

EU leaders have agreed on a roadmap for eurozone integration beyond the deal on centralised banking supervision, German Chancellor Angela Merkel said.

Specific dates have not yet been agreed for the phases of integration.

But the EU summit chairman, Herman Van Rompuy, said a deal should be reached next year on a joint resolution scheme for winding up failed banks.

Mr Van Rompuy's far-reaching roadmap was the main topic of the two-day Brussels summit.

The deal to make the European Central Bank (ECB) the chief regulator should pave the way for direct recapitalisation of struggling eurozone banks by the main bailout fund, the 500bn-euro (£406bn; $654bn) European Stability Mechanism (ESM).

Spain is especially anxious to get that help for its debt-laden banks.

Direct recapitalisation would help break the "vicious circle" in which bank debts have put a crippling burden on national budgets and led to massive taxpayer-funded bailouts.

At a late-night news conference, Mrs Merkel said "we agreed a roadmap for the future development of the currency union and talked about different aspects of this that are important.

"Above all, it was important to define when we do what."

June deadline

Mr Van Rompuy said he would present detailed plans for deeper economic integration in time for the June 2013 EU summit. They would include "mutually agreed contracts for competitiveness and growth between governments and EU institutions".

Much closer EU scrutiny of national budgets is envisaged, including penalties if governments rack up unsustainable debts.

Continue reading the main story

Eurozone banking deal

  • ECB to act as chief supervisor of eurozone banks and lenders
  • ECB to co-operate closely with national supervisory authorities
  • Direct oversight of banks with assets greater than 30bn euros ($39bn; £24bn) or with 20% of national GDP
  • National supervisors to remain in charge of other tasks
  • Non-eurozone countries that wish to take part can make close co-operation arrangements

Contractual agreements on things such as taxation and labour market policy are likely to require changes to the EU treaties - so these are likely to be put off until after the European elections in mid-2014.

The UK, along with Denmark, has a formal opt-out from joining the euro, and will not be part of the new banking union. But the UK's banking pre-eminence in Europe means it is taking an intense interest in the negotiations.

New rules on prudent banking are seen as vital to bolster the euro, as bank failures triggered the financial crash.

The measures are also aimed at preventing banking failures - of the type that happened in Greece, the Republic of Ireland and Spain - ending up on the books of eurozone governments.

Under the deal expected to take effect in March 2014, banks with more than 30bn euros ($39bn; £24bn) in assets will be placed under the oversight of the European Central Bank.

The ECB would also be able to intervene with smaller lenders and borrowers at the first sign of trouble, the BBC's Europe Editor Gavin Hewitt says.

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