As the summit of European Union head-honcho’s enters its second day in Brussels, reports indicate that the influential European leaders have actually managed to agree on something.
It seems that the EU chiefs (German Chancellor Angela Merkel and French President Francois Hollande among them) are now united in their determination to initiate Eurozone banking supervision by the end of the year.
The goal of blanketing the 17-nation currency bloc with common banking supervision has been a cause of much discussion in recent months and was a key component of this summit.
Bundesbank opposition, the extent of ECB control, what sort of timeframe would be reasonable and whether or not the concept was actually feasible are just some of the issues which have been raised.
But, according to summit summaries released yesterday, the EU will attempt to establish the European Central Bank as the primary banking supervisor by the 1st of January 2013. Waiting reporters were informed by President of the EU Herman Van Rompuy that the by next year the ECB supervisor will ‘probably be effectively operational’ and therefore able to lend to banks directly. He further stated: ‘Other steps also need to be taken quickly starting with harmonization of national resolution and deposit guarantee schemes.’
It will be up to finance ministers to finalise the rules of bank rescues and within a year they hope that the new system will incorporate all 6,000 banks in the Eurozone. There are plans that eventually the concept will extend beyond the Eurozone and incorporate banks within all 27 EU nations.
This decision might be a step in the right direction but there’s a huge amount still to be decided and plenty of opposition to European integration to deal with. Whilst this action would go a long way towards European integration pulling it off certainly won’t be easy.
An economist with the Brussels branch of ING Groep NV commented that: ‘All in all, the new single supervisory mechanism will come, but direct bank recapitalization looks very unlikely any time soon.’ Carsten Brzeski further asserted that ‘all other big-picture issues for deeper Eurozone integration remain schematic. Last night’s marathon session again illustrated how cumbersome and difficult the European decision-making process is […] integration pace remains slow’.
As of 10:45 am
The Pound to Euro exchange rate is currently trading at 1.2300
The Pound to US Dollar exchange rate is currently trading at 1.6061
The Pound to Australian Dollar exchange rate is currently trading at 1.5502
The Euro to US Dollar exchange rate is currently trading at 1.3053
The Euro to Pound exchange rate is currently trading at 0.8126
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