France and Germany inch toward banking union deal

An article in today’s Financial Times reports that, today’s meeting of finance ministers in Brussels is expected to make further progress on the creation of a single banking framework union. Following a meeting of key countries and EU officials in Berlin last Friday, unsubstantiated reports that France and Germany were resolving ongoing differences and a deal was close to completion emerged.

France and Germany have different visions as to how a banking union would work in practice. France has argued for a single, central rescue fund while Germany favors a network of national funds instead. Berlin has however dropped objections to the fund’s financing by bank levies and the European Commission’s role as the main authority for winding up failed banks as long as clear safeguards are in place and no public money or significant resolution funding will be needed. The German government is still demanding a stronger legal structure, limits on the amount of funds that can be pooled by the EU and bigger voting rights for national capitals when approving cash from the fund. Finance ministers are under pressure to strike a deal ahead of the next EU summit in Brussels on 19 December 2013.