Insight: Marathon talks set Europe on path to banking union
By John O'Donnell and Luke Baker
BRUSSELS (Reuters) - When 20 European Union leaders gathered in Oslo's sub-zero temperatures on December 10 to celebrate winning the Nobel Peace Prize, there was an unspoken item on the agenda: banking union.
France and Germany planned to hold talks on the margins of the prize-giving to see if they could find a deal that would put the European Central Bank in charge of all euro zone banks.
Such centralized oversight would be a fundamental shift after three years of battling to contain the sovereign debt crisis and might help break the link between indebted euro zone governments and their unstable banks.
Making the ECB the single supervisor would also lay the ground for a common plan for winding down stricken banks and a coordinated scheme for protecting bank deposits, both of which would underpin the 17-nation single currency bloc and help countries such as Spain and Ireland overcome their difficulties.
Over a lunch hosted by Norway's prime minister in the Gamle Logen, a 19th century Masonic lodge on the edge of central Oslo, the leaders and the ECB president, Mario Draghi, discussed the prize and the crisis. German Chancellor Angela Merkel emerged from the lunch to tell the press she felt "more courageous".
Officials present said the talks confirmed a message that had already been sent by Berlin: that Germany wanted a deal on a single banking supervisor at a finance ministers meeting on December 12 to be approved at a leaders' summit on December 13-14.
Yet a few days earlier German Finance Minister Wolfgang Schaeuble, the most powerful member of the EU finance ministers' committee, known as Ecofin, had all but scotched the chances of a landmark deal on a single supervisor.
He had insisted that the ECB's oversight be limited to a lot fewer than the 6,000 banks in the euro zone, and questioned whether the ECB's top decision-making body, the 23-member Governing Council, should be the final arbiter in supervisory decisions, striking at the very heart of the plan. Continued...