EU fin mins blocked on thorny banking union
Leaders have agreed that for that to happen, the ECB must be put in charge as the supervisor of the banks. Many countries are pushing for that to happen by the end of the year. But some countries, like Germany and the Netherlands, are dragging their feet and also quibbling over which banks would be eligible.
"It is clear that the current state is not yet a solution. Work has to continue," said German Finance Minister Wolfgang Schaeuble. "Quality supervision must take priority over an unrealistic timeframe."
But Commissioner Michel Barnier, whose portfolio includes banking, stuck to his original timetable, which is supported by France, notably.
"We want to reach a political decision by the end of the year," Barnier told reporters after the meeting.
His call was echoed by ECB President Mario Draghi who told a European Parliament hearing in Brussels on Tuesday that the region must push ahead with making the bank a common banking supervisor. And he pressed them to go further and create a Europe-wide bailout fund to keep bank failures from wrecking government finances.
The fund would put Europe in a position "where we could afford to let fail an important institution," Draghi said, and avoid losses to taxpayers or the kind of disruption that followed the failure of U.S. investment bank Lehman Brothers in 2008.
"You need to have a common resolution framework, which you don't have now," Draghi said.
Meanwhile, 11 countries agreed to coordinate the implementation of a financial transaction tax: Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain. They still need to work out the details, though the EU Commission has suggested that trades in bonds and shares be taxed at 0.1 percent and trades in derivatives be taxed at 0.01 percent. Other countries could join later if they want to.
It's still unclear exactly how the funds raised would be used, although some supporters of the tax have suggested they could create a security net for banks and help to fund the EU's budget.
France and Germany, which led the charge for the tax, had originally hoped it would be adopted by the whole European Union — but several countries, like the Britain and the Netherlands, expressed concern about its economic impact.
As was expected, the finance ministers also approved a break for Portugal on its deficit reduction targets. The country, which is funding itself with a €78 billion bailout — will reduce its deficit to 4.5 percent next year and 2.5 percent in 2014. It was originally supposed to be under 3 percent by 2013.
David Montero and David McHugh contributed to this report. Don Melvin can be reached at http://twitter.com/Don_Melvin and Sarah DiLorenzo can be reached at http://twitter.com/sdilorenzo .
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