October 19, 2012 - 09:23 AMT
PanARMENIAN.Net - European Union leaders agreed to create a single supervisor for banks in countries that use the euro — without saying when it would become fully operational, The Associated Press reports.
The deal, reached at a summit of EU leaders in Brussels, represented a shaky compromise between the Germans and French, who had been tussling over how to shore up the eurozone's stricken banking system — one of the main causes of Europe's debt crisis.
France has been pushing to get all 6,000 banks in the 17 euro countries under the supervision of one European body by the end of this year. Leaders agreed in June that, once a supervisor is in place, struggling financial institutions would be able to tap Europe's emergency bailout fund, the European Stability Mechanism, directly.
At the moment, money to help put banks has to go through a country's government — placing more strain on state finances. In Ireland's case, the government's attempts to rescue failing banks forced it into a bailout. Some fear Spain could face that fate, too.
But Germany's Chancellor Angela Merkel, wary of using taxpayers' money to prop up other countries' banks, had tried to put the brakes on the plan, insisting that creating the supervisor should be done slowly and that "quality must come before speed."
"We need an efficient supervisor because otherwise the markets won't take us seriously," she said after the agreement was reached.
The compromise included something for both — all 6,000 banks will be included, as France had wanted. But there is no firm deadline for the single supervisor to be up and running — other than to say that the "objective" is to finish the legal framework by Jan. 1, and that work on its operational implementation "will take place during the course of 2013."
"It is not because you vote on a law that you have the whole logistic framework in place the day after," said Van Rompuy.
Despite the lack of a deadline, French President Francois Hollande declared victory and presented a much more ambitious timeline than his colleagues, claiming the supervisor could be up and running within weeks or months of Jan 1.
Hollande struck a note of optimism, saying "the worst is over."