Brussels, 14/06/2012 (Agence Europe) - Addressing the German parliament on Thursday 14 June, German Chancellor Angela Merkel rejected the idea of a short-term miracle to put an end to the sovereign debt crisis in the eurozone, saying that a Herculean task lies ahead with the introduction of political and banking union in the eurozone. Germany wants any new solidarity to be accompanied by a transfer of powers from the nation state to the EU.
The chancellor said she wanted the ECB to have greater, binding, bank supervisory powers and more independent supervisory authority. Merkel said the European Banking Authority (EBA) is too reliant on national bank regulators and under-estimated the problems facing Spanish banks.
Under Article 127, paragraph 6, of the Lisbon Treaty, the European Council can give the European Central Bank greater powers. France is reported to back the idea of the ECB having more teeth when it comes to regulating banks. At the European Council at the end of the month, French President François Hollande is said to want to allow the European bailout funds (EFSF and ESM) to provide direct aid to struggling banks, by-passing the national government (as has been done with Spain). He also wants renewed discussion of the French idea of making the bailout funds to banks, so that they can borrow as much money as they want from the ECB.
A few days ahead of the G20 summit in Los Cabos (Mexico) on 18 and 19 June, Merkel has warned against the temptation of leaving it to Germany to shoulder the entire burden of bailing out the eurozone on its own, arguing that its resources were limited. She said that her answer to people who want Germany to contribute more through partial pooling of sovereign debt via eurobonds or an EU savings guarantee system, was that Germany is powerful, being the engine of the European economy and a pole of stability, but any financial aid programme would be devoid of meaning if Germany's forces are overestimated. (MB/transl.fl)