DAVOS, Switzerland Jan 24 The European
Parliament has room to "improve" an agreement among EU finance
ministers on a banking resolution system, provided it does not
breach national "red lines", France's finance minister said on
Pierre Moscovici told a news conference at the World
Economic Forum in Davos that the hard-fought compromise clinched
in two nights of negotiation last month could be improved
notably with regard to the financial backstop for a fund to wind
up failed banks.
The resolution mechanism for closing down insolvent banks is
part of a broader drive for a European banking union under which
the European Central Bank is to become the euro zone's single
banking supervisor from later this year.
"If you are asking whether the text can be improved: there's
no doubt. But the overall balance mustn't be put in question,"
At Germany's insistence, ministers agreed that a common bank
resolution fund would be built up gradually over 10 years from
levies on financial institutions.
In the meantime, governments would have to borrow from the
euro zone's rescue fund on strict conditions, adding to their
national debt, if they cannot afford to bail out a bank in their
country after shareholders and bondholders have taken losses.
Berlin, which is the EU's main paymaster, is determined that
its taxpayers should not be liable for legacy problems in other
European countries' banks. Its constitutional court could rule
any such debt mutualisation illegal.
France advocated a compromise, also supported by the
European Central Bank, under which the common resolution fund
would be able to borrow directly from the European Stability
Mechanism bailout fund, but Germany blocked that idea, EU
"The question of backstops could be better dealt with... I
would say in general that agreement has to be found with the
Parliament. The text can be improved but the outline of the text
has to be respected," Moscovici said.
European Parliament President Martin Schulz has said the
deal reached by finance ministers is unacceptable in its current
form, partly because it does not give EU lawmakers sufficient
Parliament has co-decision power over legislation as well as
a related directive on bank deposit guarantees under the EU
EU officials are rushing to reach agreement between
lawmakers and member states before the current legislature ends
in April to avoid long months of delay.
(Writing by Paul Taylor; Editing by Gareth Jones)