Most EU bank union work can be done without law change: Eurogroup head

Sat Apr 20, 2013 2:24pm EDT
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By Jan Strupczewski

WASHINGTON (Reuters) - The euro zone's top project to boost economic growth - banking union - will not be delayed for now by a row over whether it needs EU law changed because most of the work can be done before this is settled, a senior euro zone official said on Saturday.

Jeroen Dijsselbloem, the Dutch finance minister who chairs the monthly meetings of his euro zone colleagues, said the dispute on the legal requirements of the banking union can go in parallel with more technical work on how it would function.

"I am, in a sense, relaxed about it, because I know that we can push forward at least 80-90 pct of the project," Dijsselbloem told a news conference on the sidelines of the spring meeting of the International Monetary Fund.

The EU has already made the first step - it agreed the European Central Bank would take over the supervision of all banks in the euro zone from July 2014 in what is called the Single Supervisory Mechanism.

Dijsselbloem said the 17 countries using the euro can also move ahead with further harmonizing deposit guarantee programs, and creating rules on when the euro zone bailout fund, the European Stability Mechanism, or ESM, can buy a stake in a euro zone bank to boost its capital when no-one else can or wants to.

The euro zone will also create a network of national authorities responsible for closing down failing banks that will operate under the same rules.

It is the next step that becomes difficult.

The euro zone wants to transform the network of national resolution authorities into a single European institution that would decide which euro zone banks will be closed.   Continued...

Jeroen Dijsselbloem, Dutch Finance Minister and head of the Eurogroup of euro zone finance ministers, looks on during questions about Cyprus and its bailout in the Dutch Parliament in The Hague March 26, 2013. REUTERS/ Bart Maat