German Chancellor Angela Merkel has said it would take more time to establish a euro area banking supervisor, raising doubts about the January 1 deadline set by European Union leaders.
The political will to complete the framework for banking supervision now exists, Merkel said on Friday after a two-day EU summit in Brussels. But it should follow a right sequence and it is already quite an ambitious roadmap, she added.
Meanwhile, French President Francois Hollande called for setting up a common banking supervisor at the earliest, which has signaled widening disagreement between Berlin and Paris. The 20th EU summit since the financial crisis erupted was dominated by banking union talks.
On the first-day of the summit, leaders agreed to set up a single banking supervisor and to put in place the required legal framework by the end of this year. Early establishment of the financial supervisor would help Spain's banks to get direct aid during 2013. Work on the operational implementation of banking union will take place in the course of 2013.
Spanish Prime Minister Mariano Rajoy said he is not under pressure to request a bailout and a decision has not yet been made.
"The process towards deeper economic and monetary union should build on the EU's institutional and legal framework and be characterised by openness and transparency towards Member States which do not use the single currency," the European Council said in a statement.
"There is a need to ensure a clear separation between ECB monetary policy and supervision functions, and the equitable treatment and representation of both euro and non-euro area Member States participating in the Single Supervisory Mechanism," the Council said.
by RTT Staff Writer
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