A plan to establish a single banking supervisor under the aegis of the European Central Bank to oversee the 6,000 lenders in the euro area was on the agenda for a second day of talks that had concentrated Monday on the Greek situation, which still threatens to derail the euro zone after dragging on for more than two years.
The creation of the single banking supervisor is seen as a key step to breaking the so-called doom loop between lenders and governments that has brought a number of economies in Europe, including Spain’s, to the brink.
Germany made the creation of the single supervisor a prerequisite for states to tap a newly created European bailout fund and use the money to bailout their banks directly.
But Luc Freiden, the finance minister for Luxembourg, said on Tuesday that the system still could be months away.
“We shouldn’t be fixed to dates,” said Mr. Freiden. “If it takes three months longer, it’s no problem.”
The European Commission has said a unified system of regulation could be up and running in the new year.
Germany is among countries that have urged caution, saying that rushing the system would risk creating new loopholes. Britain and Sweden say much work still needs to be done to ensure the new system does not discriminate against countries that remain outside of the euro area.
“We cannot see a compromise with only the current modalities on the table,” Anders Borg, the Swedish finance minister, said on Tuesday morning. “The E.C.B. could be the supervisor but then we need to consider a treaty change,” he said. “Either you must change the treaty so it’s clear that every member is treated equitably, or you need to move it outside of the E.C.B.”
Finance ministers were also expected to discuss increasing capital requirements for banks and how to more closely monitor the draft budgets of E.U. members and correct excessive deficits.
In a sign that fixing the Greek economy and the euro would continue to be a rancorous process even after three years of continuous crisis, Jean-Claude Juncker, the prime minister of Luxembourg, and Christine Lagarde, the managing director of the International Monetary Fund, drew strikingly different conclusions late on Monday about how long it should take to bring the towering Greek debt under control.
The disagreement is a hugely sensitive matter for Greece’s biggest creditors in the euro area and for Germany in particular. The government in Berlin wants to avoid the political fallout from paying higher costs associated with meeting a target set by the I.M.F. for cutting Greek debt to 120 percent of gross domestic product by 2020.
Wolfgang Schäuble, the German finance minister, told a news conference on Tuesday morning that meeting the I.M.F. target was “possibly a little too ambitious” given the worsening economy across Europe.
Mr. Schäuble also said Greek creditors would be able to find ways to help the country meet the higher costs of delaying some of its previously agreed targets to 2016, without handing over more money.
“There are no considerations to top up the program,” said Mr. Schäuble, referring to giving additional support for Greece. “In the end it will be all about guarantees, not transfer for Greece.”
Creditors could agree instead to “take some measures to reduce interest rates that will have an immediate effect on the budget” in Greece to ensure that “problems will be solved within the financial framework of the second program,” Mr. Schäuble said.
A draft copy of a report by the troika of international lenders — the European Commission, the European Central Bank and the International Monetary Fund — that was circulating at the meeting said the bill for allowing Greece the additional time would be €32.6 billion.
Helping Greece through 2014 would require €15 billion partly to make up for lower than expected proceeds from privatizations, according to the draft report.
Article source: http://www.nytimes.com/2012/11/14/business/global/disagreement-over-banking-regulation-marks-second-day-of-eu-talks.html?partner=rss&emc=rss
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