Exclusive: Berlin mulls way to bank union without Treaty change - officials

Sat Sep 14, 2013 2:33pm EDT
 
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By Annika Breidthardt and Jan Strupczewski

VILNIUS (Reuters) - Germany is working on a plan that would allow the completion of a euro zone banking union without changing existing EU law, potentially removing a major hurdle to finish the most ambitious EU project since the start of the euro, EU officials said.

So far, Berlin has insisted the 28-nation bloc needs to amend its Treaty if it is to move the power to unwind or fix struggling banks from a national to a European level.

The compromise solution that officials in Berlin's Chancellery are working on, and discussing with European Union partners, would be a break-through because Germany's insistence so far would cause a lengthy and politically risky process.

The euro zone badly needs a banking union to restore lending to the economy, regain confidence and boost growth so that struggling economies in the south can repay their debt. It would also help to prevent another sovereign debt crisis.

"The Chancellery is preparing a solution for after the German elections. They are working together with euro zone officials on this," said one senior euro zone source involved in the negotiations.

In Berlin, a senior official said the government was thinking about many scenarios, not just one. Serious negotiations would only take place in November or December and were up to the next government, to be elected on September 22, the source said. The choice of plan would depend on the outcome of coalition talks.

EU officials were encouraged that Germany was now engaging in the negotiations, having so far pointed to legal obstacles. One Brussels official said the proposal had raised hopes for a solution by year-end even if positions were still far apart.

The head of the EU's finance ministers, Jeroen Dijsselbloem, said on Saturday work would pick up after Germany's elections to set up the agency that could order the restructuring or closure of any euro zone bank.   Continued...

 
The EU flag and the German national flag fly outside the Reichstag, the seat of Germany's lower house of parliament, the Bundestag, in Berlin November 29, 2012. REUTERS/Thomas Peter