Germany moves closer to EU banking union

As pressure grows on Europe’s battered banks, eurozone leaders are trying to rebuild confidence.
Germany’s Angela Merkel has suggested the need for a European body to monitor major banks.

However during talks preparing for this month’s EU summit Merkel fell just short of endorsing proposals to create a ‘banking union’.

“We will discuss to what degree one has to bring systemically relevant banks under specific European supervision to keep national interests from playing too large a role,” said Chancellor Angela Merkel.

European Commission President José Manuel Barroso wants to go further and have mutually insured deposits in the region’s banks.

“That is why the Commission in this debate will be for a structured and ambitious approach that may include what we can call, a banking union. Some elements of this banking union will be more integrated financial supervision and also more integrated deposit guarantees,” explained Barroso.

For now Germany is still emphasising stronger fiscal union but Merkel’s initiative shows she is willing to talk about an overhaul of Europe’s biggest banks.

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