BRUSSELS: The European Central Bank clashed with Germany on Tuesday over how quickly the euro zone should complete a system to deal with failing banks.
A separate rift also emerged at a European Union finance ministers meeting over whether or when big depositors should suffer losses, as they did in Cyprus's bailout.
ECB board member Joerg Asmussen called for a single scheme across the euro zone to close troubled banks.
Such a unified mechanism should be in place by the time the ECB starts overseeing banks next year, he said ahead of the meeting.
Those views where in conflict with German Finance Minister Wolfgang Schaeuble, who has said the next step should be the coordination of national schemes to shut down problem banks, rather than a system with shared euro zone risk.
"We want a single European resolution regime, together with a single resolution agency and a single resolution fund that is financed by a levy from the banking industry," Asmussen said, underlining what EU leaders agreed to establish last June.
"This should come into place in parallel with the single supervisory mechanism, hopefully by the summer of next year."
The frank remarks reflect a growing sense of alarm in Frankfurt over government foot-dragging in completing the two-legged banking union - with a system of ECB-led bank supervision, on one hand, closely followed by a single agency to close troubled banks and a fund to cover the costs.
A third plank, which would involve a single system for guaranteeing deposits, already looks unlikely to be created and has largely been dropped.
Asmussen's remarks set him sharply at odds with fellow German Schaeuble, who he previously worked for. Schaeuble has said a single agency to restructure or close failed banks can only be established if the EU's treaty is changed, a lengthy and complex process.
Schaeuble's chief argument is that a firmer legal basis is needed when dividing up the costs of bank failures. But some EU diplomats see that as a tactic to stall discussions until after German elections, set for September, and prevent the issue being used to rally voters against Chancellor Angela Merkel.
After more than three years of tackling a debt crisis that has forced five euro zone countries to seek bailouts for their economies or banks, dividing up the bill from bank collapses remains one of the most contentious issues facing Europe.
FRESH DIVIDE
On Tuesday, finance ministers discussed an EU proposal for a 'bail in', which would establish an order for how losses are distributed when banks are closed, with losses first handed to a bank's shareholders, then junior bondholders, then senior bondholders and, ultimately, large depositors.
indiatimes.com
A separate rift also emerged at a European Union finance ministers meeting over whether or when big depositors should suffer losses, as they did in Cyprus's bailout.
ECB board member Joerg Asmussen called for a single scheme across the euro zone to close troubled banks.
Such a unified mechanism should be in place by the time the ECB starts overseeing banks next year, he said ahead of the meeting.
Those views where in conflict with German Finance Minister Wolfgang Schaeuble, who has said the next step should be the coordination of national schemes to shut down problem banks, rather than a system with shared euro zone risk.
"We want a single European resolution regime, together with a single resolution agency and a single resolution fund that is financed by a levy from the banking industry," Asmussen said, underlining what EU leaders agreed to establish last June.
"This should come into place in parallel with the single supervisory mechanism, hopefully by the summer of next year."
The frank remarks reflect a growing sense of alarm in Frankfurt over government foot-dragging in completing the two-legged banking union - with a system of ECB-led bank supervision, on one hand, closely followed by a single agency to close troubled banks and a fund to cover the costs.
A third plank, which would involve a single system for guaranteeing deposits, already looks unlikely to be created and has largely been dropped.
Asmussen's remarks set him sharply at odds with fellow German Schaeuble, who he previously worked for. Schaeuble has said a single agency to restructure or close failed banks can only be established if the EU's treaty is changed, a lengthy and complex process.
Schaeuble's chief argument is that a firmer legal basis is needed when dividing up the costs of bank failures. But some EU diplomats see that as a tactic to stall discussions until after German elections, set for September, and prevent the issue being used to rally voters against Chancellor Angela Merkel.
After more than three years of tackling a debt crisis that has forced five euro zone countries to seek bailouts for their economies or banks, dividing up the bill from bank collapses remains one of the most contentious issues facing Europe.
FRESH DIVIDE
On Tuesday, finance ministers discussed an EU proposal for a 'bail in', which would establish an order for how losses are distributed when banks are closed, with losses first handed to a bank's shareholders, then junior bondholders, then senior bondholders and, ultimately, large depositors.
indiatimes.com
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