GERMANY has said European banking union will require changes to EU law, in a call that could slow completion of the plan designed to underpin the euro currency.
Speaking after a meeting of European Union finance ministers on Saturday, German finance minister Wolfgang Schaeuble said the EU’s Lisbon treaty had to be changed to allow common rules on shutting troubled banks – a central element of the union.
“Banking union only makes sense ... if we also have rules for restructuring and resolving banks. But if we want European institutions for that, we will need a treaty change,” he said.
Designed to ensure vulnerable countries do not have to tackle financial problems alone, the plan for banking union was one of the bloc’s biggest political steps to stabilise the euro and prevent taxpayers from footing bills for bank rescues.
“We will not be able to take any steps on the basis of a doubtful legal basis,” Schaeuble told reporters. “That’s why it’s also crucial that we strengthen the network of national restructuring funds and authorities.”
As a first step towards the union, the European Central Bank is set to start supervising Eurozone banks from July 2014.
This should be followed by a so-called bank resolution scheme to close or salvage struggling banks as well as pay for the costs involved.
The third and final step would be a coherent framework across Europe to protect banking deposits.