3 Min Read
* Works on Europe's banking union on schedule
* Debate on resolution fund to accelrate after Sept. 22
By Andrius Sytas
VILNIUS, Sept 14 (Reuters) - There will be no delay in setting up a European agency that could order the restructuring or closure of any euro zone bank as work will pick up after German elections, the head of euro zone finance ministers Jeroen Dijsselbloem said on Saturday.
The agency, called the Single Resolution Mechanism (SRM), is to complement the single bank supervisor - the European Central Bank - as part of a banking union that would break the vicious circle between weak banks and indebted governments.
The ECB is to take up its new responsibilities in autumn of 2014 and EU policymakers are now planning to have the resolution body - which would also have a fund - ready on Jan. 1, 2015.
Until then, bank resolution would be governed by a set of common rules for all national authorities called the Bank Recovery and Resolution Directive.
But the timetable appears optimistic because Germany is adamant that to create a true resolution agency, the European Union needs to change its fundamental law -- the EU treaty. This would be a lengthy and politically risky process.
Germany holds elections on September 22 and officials say that Berlin is unlikely to be ready to seek a compromise before. Dijsselbloem appeared to share that view.
"There hasn't actually been a debate on how it can be solved. As of next month, I think we should have that debate and have it in depth and work on solutions," Dijsselbloem told reporters on entering a talks of EU finance ministers.
"We're still on schedule. There was always the plan that the SRM proposal would come this summer. It did. And it was always the plan that we would finalise the discussions at the end of this year and we will," he said.
"In a week and a half the world might look different already," he said in a clear reference to the vote in Germany.
To avoid a change of the EU treaty, the European Commission proposed in July that it could become the resolution agency itself. But Germany and several other countries oppose that because it would mean the transfer of great new powers to the EU executive arm, which is already overseeing competition issues.
Legal work on the first pillar of the banking union, the ECB supervision of around 130 euro zone banking groups or about 80 percent of the banking sector in Europe, was completed last week, allowing the ECB to start technical preparations.