News / Economy

    Eurozone Set for Protracted Battle Over Banking Rules

    Spain's Economy Minister Luis de Guindos talks to European Central Bank (ECB) President Mario Draghi (R) during a eurozone finance ministers meeting in Brussels, Dec. 17, 2013.
    Spain's Economy Minister Luis de Guindos talks to European Central Bank (ECB) President Mario Draghi (R) during a eurozone finance ministers meeting in Brussels, Dec. 17, 2013.
    Reuters
    Eurozone finance ministers started tense talks on Tuesday to agree the details of one of their most ambitious financial reforms yet with a scheme to close banks, a deeply divisive issue on which Germany has dug in its heels.

    More than five years into a financial storm that toppled banks and dragged down states from Ireland to Spain, Europe wants to seal its biggest project since the euro - a framework to police banks and tackle their problems together.

    As ministers gathered in Brussels, German Chancellor Angela Merkel underscored the importance of the negotiations to complete banking union - of which agreement on how to close bad banks are a key part - and said she hoped they would reach a deal before she and other EU leaders meet on Thursday.

    “For the acceptance of the euro on financial markets, the banking union is very important,” said Merkel.

    That gives ministers 36 hours to clinch agreement on an agency and fund to shut weak banks to complement European Central Bank supervision of the sector if European Union leaders are to sign off on it this week.

    Discussions over a banking union already have dragged on for the best part of a year and are growing ever more complex as they reach their climax.

    Wolfgang Schaeuble, Germany's finance minister, sounded a downbeat note before the meeting, saying there was no consensus. “The work remains difficult,” he told reporters. “We have different opinions on several points.”

    The sense of urgency was highlighted by Dutch Finance Minister Jeroen Dijsselbloem, who chairs the meetings of euro zone finance ministers. “We have to get a result,” he said.

    Olli Rehn, the European economic commissioner who is at the talks, called for everyone to redouble their efforts in order to have “Christmas peace.”

    Ministers already have agreed on the first plank of banking union, making the European Central Bank supervisor of the region's largest banks from the end of 2014.

    But the second pillar - an agency for winding up problem banks and a fund to pay for the clean-up - is difficult.

    Germany, the euro zone's largest economy, has raised the greatest concerns about the fund, which it fears is a step towards sharing the costs of problem banks across the euro zone.

    With divisions running deep, ministers may sidestep this thorny issue so as to reach a general political agreement and stick to an ambitious timetable for the banking union project to start in 2015.

    'Too cumbersome'

    There also is a question mark over the new procedure for closing a bank. Documents circulating among diplomats and seen by Reuters show an increasingly complicated structure emerging.

    “The proposal on governance looks very complicated,” said Michael Noonan, finance minister for Ireland, which saw its economy almost collapse after its banking crisis.

    “In resolving a bank, one would want to be able to do it over a single weekend at the maximum. So anything that is too cumbersome, with various layers to it, won't be effective.”

    A general agreement among the ministers is all that is needed to start negotiations with the European parliament on the legislation.

    On Wednesday, ministers from the wider EU will join the group to discuss who will have the power to close down a laggard bank in the euro zone. On Tuesday, the talks are focusing on who pays.

    Under draft plans, banks will provide the cash to pay for the closure of failed lenders, giving roughly 55 billion euros [$76 billion] over 10 years.

    But ministers cannot yet agree how to ensure there is enough money to deal with closures while the fund is being built up or where it falls short.

    Germany wants the government of the country where the bank is based to provide the missing cash, or borrow it from the euro zone's bailout fund, the 500-billion-euro European Stability Mechanism [ESM], as Spain did in 2012.

    France worries that would conserve the vicious circle of weak governments trying to support weak banks, though, the very link the euro zone has said it wants to break via a banking union.

    Many policymakers want the ESM to act as a back-up, taking on some of the costs of cleaning up a bank closure, but Germany is opposed.

    You May Like

    US Lawmakers Vow to Continue Immigrant Program for Afghan Interpreters

    Congressional inaction threatens funding for effort which began in 2008 and has allowed more than 20,000 interpreters, their family members to immigrate to US

    Brexit's Impact on Russia Stirs Concern

    Some analysts see Brexit aiding Putin's plans to destabilize European politics; others note that an economically unstable Europe is not in Moscow's interests

    US to Train Cambodian Government on Combating Cybercrime

    Concerns raised over drafting of law, as critics fear cybercrime regulations could be used to restrict freedom of expression and stifle political dissent

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Baghdad Bikers Defy War with a Roari
    X
    June 28, 2016 10:33 AM
    Baghdad is a city of contradictions. War is a constant. Explosions and kidnappings are part of daily life. But the Iraqi capital remains a thriving city, even if a little beat up. VOA's Sharon Behn reports on how some in Baghdad are defying the stereotype of a nation at war by pursuing a lifestyle known for its iconic symbols of rebellion: motorbikes, leather jackets and roaring engines.
    Video

    Video Baghdad Bikers Defy War with a Roar

    Baghdad is a city of contradictions. War is a constant. Explosions and kidnappings are part of daily life. But the Iraqi capital remains a thriving city, even if a little beat up. VOA's Sharon Behn reports on how some in Baghdad are defying the stereotype of a nation at war by pursuing a lifestyle known for its iconic symbols of rebellion: motorbikes, leather jackets and roaring engines.
    Video

    Video Melting Pot of Immigrants Working to Restore US Capitol Dome

    The American Iron Works company is one of the firms working to renovate the iconic U.S. Capitol Dome. The company employs immigrants of many different cultural and national backgrounds. VOA’s Arman Tarjimanyan has more.
    Video

    Video Testing Bamboo as Building Material

    For thousands of years various species of bamboo - one of the world's most versatile plants - have been used for diverse purposes ranging from food and medicine to textiles and construction. But its use on a large scale is hampered because it's not manufactured to specific standards but grown in the ground. A University of Pittsburgh professor is on track to changing that. VOA’s George Putic reports.
    Video

    Video Orphanage in Iraqi City Houses Kids Who Lost their Parents to Attacks by IS

    An orphanage in Iraqi Kurdistan has become home to scores of Yazidi children who lost their parents after Islamic State militants took over Sinjar in Iraq’s Nineveh Province in 2014. Iraqi Kurdish forces backed by the U.S. airstrikes have since recaptured Sinjar but the need for the care provided by the orphanage continues. VOA’s Kawa Omar filed this report narrated by Rob Raffaele.
    Video

    Video Re-Opening Old Wounds in a Bullet-Riddled Cultural Landmark

    A cultural landmark before Lebanon’s civil war transformed it into a nest of snipers, Beirut’s ‘Yellow House’ is once again set to play a crucial role in the city.  Built in a neo-Ottoman style in the 1920s, in September it is set to be re-opened as a ‘memory museum’ - its bullet-riddled walls and bunkered positions overlooking the city’s notorious ‘Green Line’ maintained for posterity. John Owens reports from Beirut.
    Video

    Video Brexit Resounds in US Presidential Contest

    Britain’s decision to leave the European Union is resounding in America’s presidential race. As VOA’s Michael Bowman reports, Republican presumptive nominee Donald Trump sees Britain’s move as an affirmation of his campaign’s core messages, while Democrat Hillary Clinton sees the episode as further evidence that Trump is unfit to be president.
    Video

    Video New York Pride March A Celebration of Life, Mourning of Loss

    At this year’s march in New York marking the end of pride week, a record-breaking crowd of LGBT activists and allies marched down Manhattan's Fifth Avenue, in what will be long remembered as a powerful display of solidarity and remembrance for the 49 victims killed two weeks ago in an Orlando gay nightclub.
    Video

    Video NASA Juno Spacecraft, Nearing Jupiter, to Shed Light on Gas Giant

    After a five-year journey, the spacecraft Juno is nearing its destination, the giant planet Jupiter, where it will enter orbit and start sending data back July 4th. As Mike O'Sullivan reports from Pasadena, California, the craft will pierce the veil of Jupiter's dense cloud cover to reveal its mysteries.
    Video

    Video Orlando Shooting Changes Debate on Gun Control

    It’s been nearly two weeks since the largest mass shooting ever in the United States. Despite public calls for tighter gun control laws, Congress is at an impasse. Democratic lawmakers resorted to a 1960s civil rights tactic to portray their frustration. VOA’s Carolyn Presutti explains how the Orlando, Florida shooting is changing the debate.
    Video

    Video Tunisian Fishing Town Searches for Jobs, Local Development Solutions

    As the European Union tries to come to grips with its migrant crisis, some newcomers are leaving voluntarily. But those returning to their home countries face an uncertain future.  Five years after Tunisia's revolution, the tiny North African country is struggling with unrest, soaring unemployment and plummeting growth. From the southern Tunisian fishing town of Zarzis, Lisa Bryant takes a look for VOA at a search for local solutions.
    Video

    Video 'American Troops' in Russia Despite Tensions

    Historic battle re-enactment is a niche hobby with a fair number of adherents in Russia where past military victories are played-up by the Kremlin as a show of national strength. But, one group of World War II re-enactors in Moscow has the rare distinction of choosing to play western ally troops. VOA's Daniel Schearf explains.
    Video

    Video Muslim American Mayor Calls for Tolerance

    Syrian-born Mohamed Khairullah describes himself as "an American mayor who happens to be Muslim." As the three-term mayor of Prospect Park, New Jersey, he believes his town of 6,000 is an example of how ethnicity and religious beliefs should not determine a community's leadership. Ramon Taylor has this report from Prospect Park.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.9030
    JPY
    USD
    102.41
    GBP
    USD
    0.7470
    CAD
    USD
    1.3038
    INR
    USD
    67.919

    Rates may not be current.