Germany and France argued over the creation of a single European banking supervisor during a European Union summit on Thursday, disagreeing over the timetable for the banking union and what powers it should be allowed to have.
German Chancellor Angela Merkel said it was okay for the Union to take its time to set up the bank because quality was more important than speed, adding that the more immediate requirement was to call for stronger authority for the European Commission to veto national budgets that breach EU rules. However, French President Francois Hollande said that issue was not on agenda and that the priority of the summit should remain on the banking union.
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Germany is of the opinion that the central bank only be allowed to cover big cross-border banks, and does not agree with the idea of a joint deposit guarantee that will have the richer countries help banks in poorer nations. She also advocated a proposal by German Finance Minister Wolfgang Schaeuble to create a European currency commissioner as well as a European fund to invest in projects in member states.
Merkel and Hollande are likely to hold a one-on-one meeting before the summit begins in earnest, according to Reuters, giving them time to sort out some of the issues.
Countries that are outside the euro zone, including Britain, are worried that their domestic banks could be at disadvantage if the European Central Bank or other authorities oversee non-euro zone banks. Another point of contention is what representation these banks would have within the ECB, since the central bank is currently only answerable to euro member states. The original goal of having legislation in place for the single banking union by January next year is increasingly looking uncertain, and it may not be up and running until 2014.