EU ministers make limited headway on new bank rules
Mario Draghi - Photo EU Council
(BRUSSELS) - EU finance ministers made only limited progress Tuesday to find a compromise with the European Parliament on how to wind up failing banks before they can damage the wider economy.
Ministers discussed the idea of allowing some leeway in talks with Parliament, but Greece, as current holder of the EU presidency, "has no new mandate," Finance Minister Yannis Stournaras said.
Going into the meeting, Stournaras warned that time was short and called for "some flexibility so that we can close the gap."
Parliament breaks up in April for elections in May and there are growing concerns that a hard-won deal on bank regulation sealed by EU leaders in December could hang fire if the required lawmaker approval is not reached before then.
The 28 EU leaders agreed a ground-breaking Single Resolution Mechanism which will step in to close banks in trouble in an orderly fashion.
The mechanism would work alongside a new regulator, run by the European Central Bank, that is set to supervise the eurozone's 130 biggest banks starting in November.
Closing down a bank is a costly and politically charged step and so EU leaders set up a multi-step decision-making structure which gives them the final say and minimises the role of the European Commission.
But MEPs say this could clog up the system when speed is essential.
They also add that an accompanying fund to pay for bank closures is unwieldy and at 10 years, takes too long to come into effect.
Additionally, this fund is to be set up through treaties between EU member states, not under EU law, meaning Parliament has no say over its implementation.
Earlier this month, MEPs voted against the plans by a huge margin, saying they result in an "overly complex and politicised decision-making process for winding up banks."
Dutch Finance Minister Jeroen Dijsselbloem, who heads the 18-nation eurozone group, said the meeting with MEPs was "constructive."
There had been some progress, with "all participants determined to get agreement by end-March," Dijsselbloem said.
Meeting of the Economic and Financial Affairs Council (ECOFIN)