Plans were supposed to be finalised yesterday, but another meeting of the Ecofin Council has been called next week, squeezed in ahead of the next leaders’ summit.
The initial proposal saw a single supervisory authority under the ECB monitoring all of the Eurozone’s thousands of banks.
But Germany objects and wants only the largest banks to be monitored centrally, with most banks remaining under their national authorities. German finance minister Wolfgang Schauble warned giving the ECB the supervisory powers could get in the way of its main role of setting monetary policy.
“A Chinese wall between banking supervision and monetary policy is an absolute necessity,” he said.
But his French counterpart Pierre Moscovici argued that the full plan represents the best way of establishing a common supervisor and system across all Eurozone banks.
European commissioner Olli Rehn insisted a deal must be done next week.
“The single supervisory mechanism will be a cornerstone of the full banking union, which is a key part of the economic and monetary union,” he said.“It is of paramount importance to come to an agreement by the year’s end. This is a test Europe cannot afford to fail, and one Europe must be more than capable of passing.”
The Ecofin ministers also edged closer to an agreement on a new financial transactions tax which countries like France will implement, though it will not extend to countries which disagree like the UK.
And the group approved MEPs’ draft rules on regulating credit ratings agencies, which could see tougher controls on the rating of sovereign debt, as well as penalties for agencies which give positive ratings to firms which later default.
The meeting came as new data showed Spanish unemployment hit a record high, rising by almost 75,000 in November to almost 5m as the country’s economic woes continue.