Ahead of the 6th EU Summit in a year, finance ministers are meeting on Wednesday to table a compromise on creating a single supervisor responsible for all eurozone banks.
The so-called “Single Supervisory Mechanism” is seen as the first pillar of a full European banking Union.
At a Summit in October, EU leaders agreed on setting out the legal framework for the Mechanism by the 1st of January of 2013. Time is running out.
“The conclusions from the European Council are in terms of timing that there should be a political agreement by the end of this year. That is the context in which we work on the establishment of the Single Supervisory Mechanism. This afternoon's ECOFIN is obviously a key meeting hopefully to reach a compromise between the member states. There is a need of unanimity in the agreement of transferring supervisory powers to the ECB,” said an EC”s spokesperson.
Key questions remain unanswered. It is unclear how many banks the ECB will directly supervise. It is also unclear whether the ECB will take more than a year to fully develop its new role. France and Germany are in disagreement over parts of the plan.
"Rapid political agreement on the single supervisory mechanism and its endorsement at this European Council is crucially important. The SSM is the single most important step for the further deepening and completion of the EMU."
"We must make sure that discipline and responsibility go hand in hand with solidarity and convergence . We need both. It is not a question of choosing between solidarity and responsibility. Both are needed for a genuine,” said European Commission's president Jose Manuel Barroso.
MEPs also voiced their concern over the report drafted by EU Council president Herman Van Rompuy, which sets out the Summit agenda. They criticized that many of the original proposals laid down to tackle the crisis have been forgotten.
" Better not to have a Summit than this type of Summit, because finally it will create more problems in the markets than resolve it; because you are clearly not delivering what you have promised 6 months ago. (…). Maybe it is a good proposal to have fast European elections, because the real reason why we can't move on, like in the redemption Fund, or fiscal capacity for the Eurozone, or for example treasury bills, we all know it , it is not the Treaty Mr Barroso, the real reason is political , because there are elections, in Germany and before September, we can not decide on topics that are so important , that is the real reason.", said ALDE's leader Guy Verhofstadt.
EU leaders expect to complete the European Banking Union by January 2014, after the general elections in Germany.