European Union finance ministers will return for emergency meetings in Brussels next week to hammer out the remaining details of the EU’s planned banking union.
Eurozone finance ministers will meet on Tuesday and will be joined by their non-eurozone counterparts on Wednesday, ahead of a summit between EU leaders on Thursday and Friday.
The European Council in November committed member states to agreeing a position before the end of 2013 on the last element of a banking union: a European bank resolution authority and fund.
Rimantas Šadžius, the finance minister of Lithuania, which currently holds the rotating presidency of the Council of Ministers, announced on Tuesday night that member states had reached a “framework agreement” on the proposal, on which to build a “legal compromise” next week.
This confidence was echoed after the meeting by Michel Barnier, the European commissioner for internal market and services, as well as by Pierre Moscovici, the French finance minister, Luis de Guindos, his Spanish counterpar, and Anders Borg of Sweden.
The compromise largely reflects an agreement struck on Friday between the finance ministers of France, Italy, Spain, Lithuania and Germany when they met in Berlin. This was presented to other member states on Tuesday (10 December).
France, Italy and Spain succeeded in ensuring a role for the European Commission in the decision-making process of the authority and the fund. They also won their argument that the proposal should be based largely on the EU treaty and that the single resolution authority would be able to draw on European funds.
In exchange they acceded to a German demand that the funds be a loose network of national funds, which will be phased out over ten years.
Germany also obtained consensus that elements of the resolution fund should be based on an intergovernmental treaty, and that banks’ creditors would have to shoulder a greater share of losses than at present as from 2016, rather than from 2018.
But finance ministers have yet to decide how these broad principles will work in practical detail. Controversial issues include the precise nature of the decision-making process within the resolution authority and fund, as well as which banks will come within the scope of the authority.
Germany does not want the authority to have the power to wind-up its network of small Sparkassen banks.
Negotiations on Tuesday were based on a Lithuanian presidency document outlining the compromise. Lithuania will circulate a revised draft proposal over the weekend, ahead of a meeting on Monday (16 November) of an ad-hoc working group composed of member state officials.
Lithuania to circulate draft proposal
Ad-hoc working group on banking union meets
EU finance ministers meeting
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