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| Eurozone Countries Remain at Odds Over Single Banking System |
| ECB, 18.09.2012 |
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| It looks like fixing Europe's banks won't be an easy task.
This, as eurozone finance ministers remain divided over the European Commission's plan for a single banking supervision system which would allow a single regulator, working under the European Central Bank, to oversee the region's 6-thousand banks.
The proposal was unveiled by the commission last Wednesday and presented to EU ministers in Nicosia on Saturday, hoping to bring the new system into full operation by January 2014.
However, France and Germany, Europe's two largest economic powerhouses, are at loggerheads over the idea of giving the ECB a larger role as well as the calendar for the implementation of the plan.
France wants the system in place by the end of THIS year, while Germany is demanding a more cautious approach.
The issue at hand is critical for countries like Spain, as its banks are in dire need of tens of billions of euros that the government cannot afford to lend.
Spain believes that a central eurozone banking authority will facilitate its bank rescue, by allowing the eurozone's bailout funds - the European Financial Stability Facility and the European Stability Mechanism - to lend money directly to banks.
In June, eurozone finance ministers offered Spain over 130-billion U.S. dollars in emergency loans to save its ailing banking sector.
The Spanish government has been reluctant to accept the money and guaranteeing to pay it back; instead, it wants the money to be injected directly to the banks, which will be possible under the proposed system.
But many say the ECB's recent announcement for its government bond-buying plan will likely take the pressure off debt-ridden eurozone countries for now.
Hwang Sung-hee, Arirang News.
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