Millennium Post
World

EU to control individual nations

With the European Union facing its biggest crisis in 60 years, Brussels has proposed taking 'a big leap forward' to save the troubled bloc by setting up a single banking union. The suggestions to be put to a summit on Thursday and Friday were made public after being delivered to the bloc's 27 capitals by the European Union president Herman Van Rompuy, the European Commission president Jose Manuel Barroso, the European Central Bank chief Mario Draghi and the Eurogroup head Jean-Claude Juncker.

A report from the four titled Towards a Genuine Economic and Monetary Union suggests that European leaders agree that a pan-European banking authority be put in place and give Brussels the final say over national budgets in the eurozone.

'We need a banking union, a fiscal union and further steps towards political union,' Barroso told a conference. 'The first of these building blocks that can be achieved quickly without treaty change is an integrated financial framework, a banking union,' he said.

Under intense global pressure as the two-and-a-half-year sovereign debt crisis infects Spain and Cyprus after Greece, Ireland and Portugal, European Union officials have been scrambling to shore up monetary union with banking, fiscal and eventually political union.

The report, however, sets no deadlines for deepening European Union integration, offering instead to finalise a grand roadmap for the future in December.

Diplomatic sources say a firm proposal on banking union is expected in October if European Union officials get the go-ahead from heads of state and government at the 28-29 June summit.

The proposal sees the Frankfurt-based ECB tasked with banking supervision across the 17-nation eurozone, with the London-headquartered European Banking Authority overseeing the sector in the remaining 10 non-euro states. That would satisfy major powers Germany and France, as well as Britain, which could sign on to such a scheme or opt to remain out as it has on other issues.

To reassure depositors and insure against bank runs, Brussels is suggesting Europe-wide guarantees on deposits. It also proposes a 'resolution' scheme mainly funded by banks to close down bad banks.
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