Banking Union in the roadmap for the Euro: interim assessment on the eve of the European Council

To find a decisive response to the euro crisis the European Council is putting forward a four part programme for union: budgetary, banking, economic and political union. This roadmap, which was discussed on 13th and 14th December 2012, aimed to remedy the constitutive weaknesses of the Economic and Monetary Union. It concerns, on the one hand, the lack of adequate budgetary and economic coordination, together with solidarity mechanisms, and on the other, the upkeep of national supervision in the face of a trend towards financial integration that has been fostered by the introduction of the euro.

Overall the project for banking union aims to centralise supervision under the guidance of the European Central Bank (ECB), a necessary condition for the recapitalisation of struggling banks via the European Solidarity Mechanism (ESM). This should break the national vicious circles that exist between banks and States and thereby stabilise the euro zone. Although integrated supervision by the ECB is a necessary first step to strengthening the euro it raises questions about the distribution of tasks within the new mechanism, just as much as it does about the future organisation of the institutions themselves.

• Primary Source

ESO: Background Information: Press Release: Bank supervision: Council confirms agreement with EP http://www.europeansources.info/record/press-release-bank-supervision-council-confirms-agreement-with-ep/

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