Eurozone banks look a little safer after supervision deal
ECB will become single supervisor for all eurozone banks, making bailouts simpler to organise
EUROPEAN leaders have agreed that the European Central Bank (ECB) will become the single supervisory body for all eurozone banks, a step - says The Wall Street Journal - that will smooth the way for the bloc's bailout fund to pump capital directly into eurozone banks.
Direct recapitalisation of banks is seen as a crucial step to solving the debt crisis and is designed to help countries who are too economically feeble to support their banking systems.
Commission President Jose Manuel Barroso said the ECB "will be able to intervene if needed in any bank in the euro area".
German Chancellor Angela Merkel said setting up the ECB supervisory role "isn't a question of one or two months" but she hoped the new system would be able to fulfill its role effectively "over the course of 2013".
French President François Hollande reportedly pushed hard for a faster solution. "The quicker the mechanism is in place, the sooner recapitalisation can take place," he said at a news conference.
But as the Financial Times reports, ECB chief Mario Draghi told leaders it would take six to 12 months to get the news system up and running.
While all 6,000 eurozone banks are required to be under the purview of the supervisor by the end of next year, Merkel won a concession from Hollande over the question of smaller, regional banks. German officials insisted that national supervisors will still have day-to-day responsibility, but under the new plan, the ECB would still have power to intervene.
The leaders also discussed plans for a common budget for the 17 eurozone nations, one that could absorb economic shocks impacting one part of the bloc but not others. Barroso said: "This is something for the medium and longer term."
Realists might say it'll take even longer than that. The plan risks placing the problems of weaker nations on the public balance sheets of stronger nations - making it controversial in both Germany and the Netherlands, to name but two.