EU leaders on Thursday agreed to create a single banking overseer for the eurozone that could aid ailing banks, but Germany and Britain balked at some details and on Friday Merkel pronounced aid for banks dead in the water for now, The New York Times reported. "If recapitalization is possible, it will only be possible for the future," Merkel said after the two-day meeting.
The 27 EU heads of state and government agreed "on a political framework for the end of 2012 and a gradual implementation in 2013" of a new EU single supervisory mechanism, European Commission spokesman Olivier Bailly said after the first day of a two-day EU leaders' summit on resolving the eurozone debt crisis. The commission is the EU executive body. The European Central Bank was put into the framework as the region-wide banking supervisor, officials said, formalizing an arrangement the leaders agreed to at a summit meeting in late June.
The new system would be phased in next year starting Jan. 1 and likely cover all 6,000 banks in the 17-nation eurozone by Jan. 1, 2014, an EC official said. It is intended to break the connection between banks and governments at the root of the euro crisis.
Rajoy said the summit included some progress. "There is a willingness in Europe to continue moving toward integration, but things are never easy," he said.
Germany remained at odds with the EC over the scope of the proposed ECB supervision, saying it wanted the ECB's authority limited only to the biggest, "systemic" banks, the BBC reported. EU Commission President Jose Manuel Barroso, however, said the ECB would "be able to intervene if needed in any bank in the euro area."
