A gathering of Eurozone finance ministers on Monday gave the green light to disbursement of bailout tranches to Cyprus and Greece. However, the ministers continued to squabble over the establishment of a proposed banking union.
The European Stability Mechanism, the euro area's permanent bailout fund, will provide a total of EUR 3 billion in its first-ever bailout payment to Cyprus. Of this, EUR 2 billion was disbursed on Monday.
At the same time, finance ministers observed that Cyprus need to do more to strengthen the country's anti-money laundering framework. Cyprus should target areas covering implementation of customer due diligence by banks, including through adequate supervision, and the functioning of the company registry, among others, the Eurogroup said in a statement.
The ministers also approved EUR 7.5 billion aid disbursement to Greece. The payments will take place in two sub-tranches. A first sub-tranche of EUR 4.2 billion will be approved by the Eurogroup Working Group and the European Financial Stability Facility in the coming days.
The disbursement of the second sub-tranche will be made in June 2013. The Eurogroup said Greece has made "good progress" with implementing the required prior actions.
On Greek economy, the ministers observed that the economic outlook is largely unchanged from the previous review, with continued prospects for a gradual return to growth in 2014. The fiscal performance in 2012 complied with the program targets and that this is expected to continue in 2013 and 2014.
Though Greece is quickly regaining cost competitiveness, product and services market reforms will need to accelerate to allow gains in cost competitiveness to translate more rapidly into prices, the group said.
The meeting made little progress with the proposed banking union as the split between euro area states on the establishment of the single supervisory mechanism became more evident. While France, Spain and Portugal called for fast and full implementation of banking union, Germany insisted that it needs a treaty change and will take some time.
Eurogroup Chief Jeroen Dijsselbloem, who is also the Dutch Finance Minister, said that he is not sure if banking union needed a treaty change. The Germans are putting forward valid questions which needs to be dealt with, he told reporters ahead of the meeting.
Meanwhile, German Finance Minister Wolfgang Schaeuble said treaties need to be amended before such a union is formed. Current treaties do not give enough foundation for a common European banking authority, Schaeuble said on the sidelines of the meeting.
Meanwhile, French Finance Minister Pierre Moscovici backed the majority view of a speedy introduction of the banking union. "We need to go as fast as possible to have a comprehensive banking union," he said ahead of the meeting.
For comments and feedback contact: editorial@rttnews.com
Business News
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.