PARIS — European Union finance ministers are in Brussels for a two-day meeting to flesh out June agreements on the eurozone debt crisis. They are downplaying expectations, even as they face tremendous market pressure to deliver.
Banking supervision, aid to Spain and Cyprus and how to handle the Greek debt - European Union finance ministers are tackling these and other key issues during talks in Brussels.
Lagarde's warning
On Friday, IMF Chief Christine Lagarde increased pressure, praising recent steps taken by EU leaders, but warning the global economy may slow further if they do not do more.
"It's also a question of implementation… diligent, rigorous, implementation. And from the IMF perspective, we believe more needs to be done in order to really complete the architectural job of the eurozone: a monetary union, a banking union, followed by a fiscal union," she said.
Fleshing out June agreements
The finance ministers will try to fill in the blanks for a series of agreements reached by the 27 EU leaders during a summit last month. Markets initially cheered those decisions, which included new ways to use the EU's bailout fund and plans for a future banking union.
But market confidence quickly vanished.
"The reason is that clearly there is still no agreement among the heads of state, among the finance ministers, among the different countries about the course to pursue," explains economist Andre Sapir of the Brussels think tank Bruegel. "The declarations that are made at the end of the summit are then interpreted by different countries and different leaders in different manners. And that is what markets don't like."
The euro has sunk to a new low against the dollar. And borrowing costs for shaky Spain and Italy have again spiked.
Greater role for European central bank
Analysts like Sapir do hail one EU decision reached late last week: to give the European Central Bank a greater oversight role. That, he says, is the first step in EU plans to create a banking union.
"The notion that we need to create in Europe or in the euro area is something comparable to what exists in the United States, with an institution like the FDIC [Federal Deposit Insurance Corporation] - an institution that is able to supervise, to provide deposit insurance, and to provide resolutions for banks in crisis at the euro-area level," he said.
This week's finance meeting was supposed to be the last until September. But EU officials say that given the complexity of their workload, the ministers will likely be meeting again later this month.