A two-day EU summit kicks off in Brussels hamstrung by the lack of a German government.
Officials in Berlin say they want to reach a common position on a mechanism for restructuring or winding up failing banks by the end of the year but with an entire policy slate to be thrashed out and the centre-left SPD saying the aim is to form a new German administration with Angela Merkel’s CDU by Christmas, time is very tight.
On banking union, a senior German official said Berlin had no plans to present an alternative plan for how a resolution fund might work at the summit and reiterated Berlin’s stance that national budget autonomy for winding up banks could not be outsourced.
Spelling out how it will test Europe’s big banks next year, the European Central Bank yesterday insisted a common resolution mechanism must be in place by the time it takes over supervisory powers.
France, Spain and Italy want a joint commitment by all 17 euro zone countries to stand by weak banks regardless of where they are. Germany, which fears it would end up picking up most of the bill, is worried about the euro zone’s rescue fund, the European Stability Mechanism, helping banks directly without making their home governments responsible for repaying the aid.