EU leaders have announced the outcome of talks which rumbled on through the night. Those attending agreed on a new banking supervisory body with the power to close ailing banks.
European leaders agreed early Friday to pursue further steps to secure EU-wide financial security and maintain momentum in grappling with the region's debt crisis.
Following eight hours of overnight negotiations at a summit in Brussels, leaders vowed to forge ahead with plans for a body which would be able to restructure or close down struggling banks. The leaders also agreed that the wind-downs should be paid for out of a pot of money, to which banks themselves would contribute.
"This evening we decided to put in place a single resolution mechanism," Herman Van Rompuy, the president of the European Council and chairman of the summit, told a news conference.
Those attending also floated ideas on how to compel countries to stick to their economic targets and the possibility of creating a "solidarity fund" for member states that experience economic shocks.
However, the discussion was superficial, and proper debate on the issues was put off until next year.
ECB deal clinched
Friday's developments come a day after EU ministers clinched a banking supervision deal, which will see the European Central Bank (ECB) supervise the bloc's biggest financial institutions and intervene in struggling smaller banks.
If the European Parliament provides its assent to the banking supervisor deal, the ECB should begin its task of monitoring Europe's largest banks from March. It would be responsible for up to 6,000 banks from January 2014.
Such an achievement would be one of the EU's biggest since the debt crisis began. It could also help to snip away at the "doom loop" between debt-ridden banks and destabilized governments.
But it would still constitute only one chapter in the banking union saga - apart from the banking supervisor, a resolution authority, a fund for collapsed banks and coordinating deposit guarantee schemes to prevent bank runs will all be crucial ingredients for a comprehensive solution to Europe's banking crisis. Building such an architecture is likely to take several years.
Aid injection to Greece
On Thursday, EU finance ministers also agreed on a new injection of aid to Greece: 34 billion euros ($45 billion) this month, followed by additional aid to the tune of 15 billion euros during the first quarter of 2013.
The disbursement will come from the EU rescue fund, ESM, and will help Greece reduce its huge debt to 124 percent of gross domestic product (GDP) over the next decade.
Greece receives the fresh funding after it successfully completed a cut-price bond buyback this week. Athens claimed that this slashed about 20 billion euros from a chunk of its debt, estimated worth about 40 billion euros at face value.
sej/cmk (Reuters, dpa, AFP)