Also Monday, the finance ministers postponed at least until Nov. 20 a decision on releasing a long-delayed installment of €31.5 billion in aid to Greece. The country’s finance minister warned that without the aid, the country’s risk of defaulting on its debt remained high.
A plan to establish a single banking supervisor under the aegis of the European Central Bank for the 6,000 lenders in the euro area dominated a second day of talks here. The meeting Monday concentrated on the plight of Greece, which still threatens to derail the euro zone after dragging on for more than two years.
The new banking supervisor is seen as a major step toward breaking the so-called doom loop in which frail banks can endanger national finances and push countries toward full bailouts.
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 recapitalize their banks directly.
But Luc Freiden, the finance minister of Luxembourg, said Tuesday that the system still could be months away.
“We shouldn’t be fixed to dates,” Mr. Freiden said. “If it takes three months longer, it’s no problem.”
Maria Fekter, the Austrian finance minister, asked whether the creation of the new regulator would require changes to the E.U. treaty, or “would be the better solution” in creating a banking union. “Speed kills when we don’t have the best solution,” she told ministers.
The European Commission has said a unified system of regulation could be up and running next year. Germany is among the countries that have urged caution, saying that rushing the process would risk creating new loopholes. Britain and Sweden say much work still needs to be done to ensure the system does not discriminate against E.U. countries 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 Tuesday. “The E.C.B. could be the supervisor but then we need to consider a treaty change. 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 also discussed creating a “Robin Hood tax” — a fee levied on equity trades.
Britain and Sweden are among the countries that have said they would not participate in such a tax, but 11 of the 27 E.U. countries have expressed interest in going forward with the plan. On Tuesday, Wolfgang Schäuble, the German finance minister, said plans for the tax “will gather momentum.”
In a sign that repairing the Greek economy and the euro would continue to be a rancorous process even after years of 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 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 the higher costs that would result from meeting the I.M.F.’s target for cutting Greek debt to 120 percent of gross domestic product by 2020. The debt is now estimated at 175 percent of G.D.P.
Mr. Schäuble said that meeting the I.M.F. target was “possibly a little too ambitious” given worsening economic conditions across Europe.
He also said that Greece’s creditors would find ways to help the country meet the higher costs resulting from giving it more time to meet fiscal goals now set for 2016, other than handing over more money.
“There are no considerations to top up the program,” Mr. Schäuble said. “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 Greek budget, he 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 more time would be €32.6 billion, or $41 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.
An additional €17.6 billion would be needed for 2015-16 because Greece was expected to be servicing more debt than previously forecast and because the country may be unable to tap capital markets, the draft report said.
Late Monday, ministers put off a decision on releasing a €31.5 billion installment of aid to Greece until officials could assess the country’s progress in implementing measures Athens agreed to take as a condition for receiving two bailout packages totaling €240 billion.
Yannis Stournaras, the Greek finance minister, said that without the funding the country was still perilously close to defaulting on its debt.
“The risk of an accident is very great,” Mr. Stournaras told the European Parliament’s economic and social affairs committee. “Time is running out, society is exhausted.”
Even after euro zone finance ministers approve the aid, it still must be cleared by a number of national parliaments.
Niki Kitsantonis contributed reporting from Athens.
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