Non-euro and euro members' differences sink EU discussions
Source: Agencies |
June 24, 2013, Monday
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EUROPEAN Union finance ministers negotiating almost around the clock broke up unsuccessful talks on Saturday on how to downsize or close banks without letting taxpayers foot the bill and faced a danger that the divisive issue could undermine trust in Europe's ability to stabilize its financial system.
Irish Finance Minister Michael Noonan said the negotiations he chairs would need another "full meeting" on Wednesday to bridge fundamental differences between the 27 member nations and warned "there is no guarantee it will reach conclusion."
Despite 19 hours of intricate talks, several ministers hinted at the prolonged impasse between the members of the 17-nation eurozone and the EU's 10 other members like Britain that are not part of the currency union.
"It is principally an issue of the non-euro and the euro" nations, Noonan said.
French Finance Minister Pierre Moscovici voiced confidence that ministers will be able to broker a deal at the emergency meeting which comes only hours ahead of a summit of EU leaders to assess the brittle financial state of the union.
"I have no doubt we will reach a deal," Moscovici said.
An agreement on the rules would have been an important step to stabilizing Europe's financial system and establish a so-called banking union, which aims to give the supervision and rescue of banks to European institutions rather than leaving weaker member states to fend for themselves. It is a key part of the EU plans to restore financial and economic stability to the region.
The ministers at their meeting in Luxembourg sought to decide on new rules determining the order in which investors and creditors would have to pay for bank restructurings. A key stumbling block was who to hit hardest: Should losses be limited to banks' shareholders and creditors, or should small companies and ordinary savers holding uninsured deposits worth more than 100,000 euros (US$132,000) also be included?
The most controversial issue, however, proved to be how much leeway member states should be granted in making decisions on winding down banks.
Some countries like Britain don't want to be bound by rigid European rules. Other nations warned that too much flexibility would create new imbalances between the bloc's weaker and stronger economies and destroy the project of establishing a single set of rules that creates certainty for investors and restores trust in the financial system.
Moscovici said "90 percent of the work" was done, although France and others were still pushing for greater flexibility.
Irish Finance Minister Michael Noonan said the negotiations he chairs would need another "full meeting" on Wednesday to bridge fundamental differences between the 27 member nations and warned "there is no guarantee it will reach conclusion."
Despite 19 hours of intricate talks, several ministers hinted at the prolonged impasse between the members of the 17-nation eurozone and the EU's 10 other members like Britain that are not part of the currency union.
"It is principally an issue of the non-euro and the euro" nations, Noonan said.
French Finance Minister Pierre Moscovici voiced confidence that ministers will be able to broker a deal at the emergency meeting which comes only hours ahead of a summit of EU leaders to assess the brittle financial state of the union.
"I have no doubt we will reach a deal," Moscovici said.
An agreement on the rules would have been an important step to stabilizing Europe's financial system and establish a so-called banking union, which aims to give the supervision and rescue of banks to European institutions rather than leaving weaker member states to fend for themselves. It is a key part of the EU plans to restore financial and economic stability to the region.
The ministers at their meeting in Luxembourg sought to decide on new rules determining the order in which investors and creditors would have to pay for bank restructurings. A key stumbling block was who to hit hardest: Should losses be limited to banks' shareholders and creditors, or should small companies and ordinary savers holding uninsured deposits worth more than 100,000 euros (US$132,000) also be included?
The most controversial issue, however, proved to be how much leeway member states should be granted in making decisions on winding down banks.
Some countries like Britain don't want to be bound by rigid European rules. Other nations warned that too much flexibility would create new imbalances between the bloc's weaker and stronger economies and destroy the project of establishing a single set of rules that creates certainty for investors and restores trust in the financial system.
Moscovici said "90 percent of the work" was done, although France and others were still pushing for greater flexibility.
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