June 5, 2012
Chancellor Merkel and European Commission President Barroso on Monday met to talk about creating a banking union to increase oversight over systemically important European banks. The move could mark a step toward providing direct aid from Brussels to ailing EU financial institutions.
Every time the euro crisis begins to intensify, a new idea for solving it seems to start bouncing around European capitals. This week, talk is focused on the concept of creating a European banking authority to keep watch on those financial institutions that are too big to fail.
And with Chancellor Angela Merkel and European Commission President Jose Manuel Barroso having discussed the idea over veal cutlets and white asparagus in Berlin on Monday, it seems likely that it will figure prominently on the agenda of the European Union summit scheduled for later this month.
"We will also talk about the extent to which we have to put systemically important banks under a specifically European oversight so that national interests don't play too large of a role," Merkel said prior to her working dinner. "Those are mid-term goals."
The German chancellor also said that the European fiscal pact, which she foisted upon the EU in early March in order to improve budgetary discipline across the bloc, is just one step toward further euro-zone integration. "We need more Europe in the euro zone, not less Europe," she said.
The idea of a European banking union was floated last week by the European Commission as a way of ultimately clearing the way for using European funds to directly bail out needy banks on the Continent. Germany has opposed such direct bailouts thus far due to the absence of an EU oversight mechanism. Barroso has said that a "banking union with more integrated financial supervision" was an important step toward complementing Europe's existing monetary union with an economic union.
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