EU Agrees On Bank Supervisor After Compromise
European leaders have agreed to create a supervisor for all eurozone banks in 2013, after a disagreement between France and Germany threatened to derail the deal.
By the end of a two-day summit of European leaders in Brussels, a 120bn euro (£97.5bn) package of measures to boost growth had also been unveiled.
It included using proceeds from a proposed tax on financial transactions to tackle youth unemployment - currently running at 50%.
After 11-hours of negotiations over a bank supervision deal, a†European Commission (EC) spokesperson said there†had been an "agreement on a political framework for the end of 2012 and a gradual implementation in 2013."
The deal represents a compromise between Germany and France, which disagree on how best to support the region's banking system.
France wanted the watchdog to be up and running for all 6,000 banks in the 17 euro countries by January next year, while Germany thought implementation should be slower, involving only the biggest bank groups at first.
Chancellor Angela Merkel called the timetable "very ambitious," adding that Europe needed "quality before speed", and a watchdog "worthy of the name".
But France's President Francois Hollande said it was "a good deal".
The agreement includes something for both countries: all 6,000 banks will be included, but there is no firm deadline for the single supervisor to be up and running.
It is crucial to the eurozone's future as leaders agreed in June that, once the body is in place, failing banks will be able to tap its new debt rescue fund.
The European Stability Mechanism (ESM) will help failing banks directly, meaning they do not have to place more strain on Governments' finances.
But not all European countries are convinced the supervisor is a good thing.
Those that belong to the EU but do not use the euro - such as the UK - are nervous that the new system would see investors flock to eurozone banks because they look safe.
Some are also concerned that the eurozone countries will vote as a group on regulations that affect all EU members.
At the end of the summit, David Cameron warned he would veto the EU's 2014-20 budget if it included increases in spending at a time when member state budgets are being cut.
The Prime Minister said: "We can't have EU spending going up and up.
"It would not be acceptable to see a huge increase in spending when budgets are being cut."
The 27 members of the EU meet next month to agree on 2014-20's 1trn euro (£0.8trn) budget proposed by the EC.
what do you think?
Where Hitler failed Merkel wins. The sooner this conglomeration fails the better the diversity of the economies and cultures alone makes the Euro flawed.
This will be a very costly to the UK and other countries. Time to get out while we can before we get dragged down further.
A very good idea and not before time. This will no doubt outrage the Anti EU blinkered brigade but it's a step in the right direction if we are to put a stop to the pure greed of our City masters! It's time to put the leashes on!