IMF pushes for rapid start to banking union

 
Tim Wallace
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THE EUROZONE’S banking union should be implemented promptly to help the economies move on from the financial crisis, the International Monetary Fund (IMF) said over the weekend, in the run up to this week’s EU summit.

The call from the top finance body came just days after Spanish prime minister Mariano Rajoy and French president Francois Hollande jointly urged other leaders to adopt the plans as soon as possible.

German chancellor Angela Merkel wants the proposals – which will see the European Central Bank given authority over the financial stability of all Eurozone banks – scaled back, covering only the systemically important institutions.

But the IMF’s International Financial and Monetary Committee has added its voice to those calling for the plan to go ahead.

“We look forward to timely implementation of an effective banking and a stronger fiscal union to strengthen the monetary union’s resilience, and structural reforms to boost growth and employment at the national level,” said the communiqué from its latest meeting.

And the director of the IMF’s European department, Reza Mogadam, also backs the plans.

“Creating a banking union is the logical conclusion to the idea that deeply interconnected banking systems require a more integrated prudential approach,” he said yesterday.

This week’s EU summit is expected to see more progress made on the banking union plan, as well as a review of the compact for growth and jobs which was agreed at in June.