Germany’s finance minister hit hopes that Europe’s stressed banks could soon tap the region’s rescue funds directly when he said on Monday that a new Europe-wide banking supervisor is unlikely to be up and running in the new year.
Meanwhile, Chancellor Angela Merkel called on Germans to show “solidarity” with those members of the 17-country bloc that uses the euro which are struggling with much-needed economic reforms.
EU leaders agreed in June funds set up to bail out indebted governments could be allowed to funnel money directly to ailing banks – rather than via governments which would add to their debt burden – once an effective central bank supervision system is established.
The idea is to assuage worries about the health of Europe’s banking system, which is in danger of grinding to a halt as banks become increasingly wary of lending to one another.
The European Commission will make proposals for a new supervisory system on September 12. Internal market commissioner Michel Barnier said last week he hopes it could be phased in starting next January and be extended to all banks in the euro zone at the beginning of 2014.
Barnier also voiced hopes that banks could be helped directly from the US$629 billion) European Stability Mechanism, Europe’s planned permanent bailout fund, starting in January.