Germany Will Face Resistance on Euro Banking Reforms

European leaders opened a two-day Brussels summit on Thursday with Angela Merkel, the German chancellor, facing stiff resistance to her plan to force structural reforms on the ailing economies of the eurozone.

The summit was preceded early on Thursday by EU finance ministers agreeing on a compromise on how to rescue weak eurozone banks, or close down rotten ones.

While ministers and senior EU officials hailed the accord as “revolutionary” and “historic”, the complicated deal, resisted by Germany, meant there would be no quick leap to a common eurozone system of bailing out bad banks.

Germany had resisted key elements of the bank resolution plans for 18 months, but yielded slightly by agreeing to phase in pooled responsibility for the eurozone over a decade from 2015.

It foiled French-led attempts to have the eurozone’s €500bn bailout fund serve as a “fiscal backstop” for winding up or recapitalising bad banks.

“We wanted a backstop,” said Pierre Moscovici, the French finance minister. “We are working on its definition, which will evolve over time.”

The German finance minister, Wolfgang Schäuble, said: “The final pillar for the banking union has been achieved.”


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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza