Germany’s Chancellor Merkel supports a two-speed European UnionEU unveiled a plan to create a coordinated banking union. EC president Barosso sustains this idea. Spain sold EUR 2.1 bln of medium- and long-term bonds.
German Chancellor Angela Merkel said she supports a two-speed European Union, with the faster group seeking deeper integration such as a fiscal union to complement monetary union, according to Bloomberg, Mediafax quotes. “We need more Europe, we need not only a monetary union, but we also need a so-called fiscal union, in other words more joint budget policy,” Merkel said in an interview on ARD German public television broadcast yesterday. Europe is already moving at different speeds, Merkel said, citing the Schengen agreement that abolished border controls between some European countries and the monetary union that excludes the U.K. and Denmark. “This will be intensified,” she said. “Those in a monetary union will have to move closer together. We have to be open. We always have to make it possible for everyone” to join, “but we mustn’t stop because one or the other don’t want to come along just yet.” German Chancellor Angela Merkel called for countries to give up more powers to Europe “step by step” and says a “political union” is needed. For his part, the British leader, David Cameron, echoed Merkel’s call for action.German Chancellor Angela Merkel also said the EU needs a political union even if it means some countries integrating faster than others. Speaking on German TV, she called for “more Europe”, including a budgetary union, saying “we need a political union first and foremost”, BBC reports. Merkel said EU leaders at a meeting later this month will discuss a plan to transform the EU into a political union. Still, a breakthrough can’t be achieved at just one summit, she said. The European Union unveiled a plan Wednesday to create a coordinated banking union rather than leaving troubled nations to deal with their own banking crisis.But the plans for more a unified EU bank regulator and bailout fund won’t come in time to deal with the crisis sweeping Europe right now, including the beleaguered Spanish banking system which has become the epicenter of the European sovereign debt crisis. In addition, there would be a single EU supervisor with ultimate decision-making powers for the major banks, and a common set of banking rules. “This proposal is an essential step towards a banking union in the EU and will make the banking sector more responsible,” said European Commission President Jose Manuel Barroso in a statement, edition.cnn.com informs. “This will contribute to stability and confidence in the EU in the future, as we work to strengthen and further integrate our interdependent economies.”
Osborne assured the UK would not be involved in any banking union
David Cameron is due in Berlin yesterday for crisis talks with the German chancellor as fears grow about the debt crisis engulfing the eurozone. Cameron is set to use a one-to-one meeting with Merkel to tell her the eurozone has only weeks to act to shore up the single currency, thisismoney.co.uk reports. He will press the case for ‘eurobonds’ –collective eurozone debts that would enable other countries to benefit from lower borrowing costs and reassure the international markets of Germany’s willingness to stand behind the euro. Speaking ahead of the meeting, Chancellor George Osborne said measures to stabilise the single currency bloc could involve a banking union – adding that Britain would implement safeguards in this case to protect its own financial sector.In any case, Osborne assured that the UK would not be involved in any banking union and that safeguards would be required before one was set up to protect out financial sector. London and Washington are increasingly frustrated at the failure of eurozone leaders to restore confidence in their banks and the future of the euro. Downing Street said Cameron and US President Barack Obama held telephone talks late on Tuesday night and had agreed on the need for an ‘immediate plan’ to try to halt the crisis.The European Commission on Wednesday proposed powers for regulators to take control of failing banks. But the measure may not take effect until 2015, far too late to ease the current crisis.
A solution could be found to spain’s banking crisis
The meeting with Merkel comes as Spain edged closer to asking for a BP 100 bln bailout of its banks on Wednesday having admitted it can no longer raise money on international markets, while six German banks were hit by a credit rating downgrade. Also Spain was going to face a test yesterday when it issues up to EUR 2 bln in government bonds at auction. Spain met strong demand when it sold EUR 2.1 bln of medium- and long-term bonds, passing a key test of its ability to tap investors after a minister said earlier this week the country was being cut off from the markets.Also, Osborne expressed optimism yesterday morning that a solution could be found to Spain’s banking crisis. “I know they are working very hard on an imminent solution,’ he told the BBC Radio 4 Today programme. However he warned that solving these problems would not end the crisis in the eurozone and he called for permanent measures to stabilise the single currency bloc. He added: ‘Part of running a single currency – following what I have called the remorseless logic of having a single currency – is that you have something more akin to a banking union or a financial union. Also, Germany is resisting Spain’s pleas that any banking bailout should have no strings attached. Madrid wants a direct recapitalisation of its financial sector, rather than a handout from the eurozone’s rescue fund, which would require it to agree to new austerity measures. Spain, the eurozone’s fourth biggest economy, has admitted it is losing access to credit markets due to prohibitive borrowing costs. On the other hand, Germany must “assume its part” in saving the currency, says Spain’s economy minister, Luis de Guindos. If there is rescuing to be done, Germany is the obvious rescuer, economist.com informs. Yet rather than toss out the lifebelt, Merkel offers swimming lessons.
