Wednesday August 8, 2012
EU to present banking union plan on Sept 11
BRUSSELS: The European Commission will present its plans for a banking union, part of efforts to tame the eurozone debt crisis, on Sept 11, a European source said.
“A plan will be ready on Sept 11,” the source said, adding that in the meantime the details would have to be nailed down.
The new entity, agreed on at a “breakthrough” June 2829 European Union (EU) summit, is meant to supervise the banking industry in the bloc, having a key role in winding up failed lenders so that they do not undermine the financial system.
The banking union will work with the new permanent eurozone rescue fund, the European Stability Mechanism (ESM), which will be allowed to aid needy banks directly so as to avert problems and avoid adding to state debt.
Spain is expected to be the first beneficiary of the new system, with its EU partners having already agreed to provide up to 100 billion euros (US$123bil) to help its stricken banks.
The banking union plan, if it is unveiled on Sept 11, will come just one day before the German constitutional court is due to rule on whether the ESM is compatible with the country's constitution.
It is expected court will give its approval but the considerable delay after the ruling was put back to Sept 12 following a hearing in July has unsettled financial markets. - AFP