Dec. 13 - European Union finance ministers agree to make the European Central Bank the chief supervisor for banks in the euro zone, a move designed to underpin the currency and its financial system. Ciara Sutton reports.
It's the biggest overhaul of the European banking system since the crisis began. After months of tortuous negotiations, finance ministers finally clinched a deal to give the ECB powers to police at least 150 of the euro zone's biggest banks from 2014. EU Commissioner Olli Rehn. (SOUNDBITE) (English) EU COMMISSIONER FOR ECONOMIC AND MONETARY AFFAIRS OLLI REHN, SAYING: "The single supervisory mechanism for euro area banks is a breakthrough towards a true banking union which is significant and crucial in order to restore and reinforce confidence into the european economy." The agreement marks the first step to integrate the bloc's response to problem banks. But not everyone's convinced. Scotia Capital's Alan Clarke. (SOUNBITE) (English) ALAN CLARKE, SCOTIA CAPITAL, SAYING: "Growth is painfully slow and going the wrong way in some areas. I don't think a banking union makes any difference to that. The only tiny glimmer of hope is that it ticks the box and appeases the likes of Germany to allow further bailouts or even the ECB to deliver an rate cut, but even then it's not going to be a game changer." To reach a deal concessions were made to those like Britain who feared the impact on those outside the euro zone. The authority of the ECB's Governing Council was also tempered to appease Germany. (SOUNDBITE) (German) GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE SAYING: "We all felt the chance was good, and we said let's solve the last problems." But some key issues have been avoided. There's no agreement yet on the direct recapitalisation of struggling banks which is supposed to be key to the bloc's rescue mechanism. France, Italy and Spain are keen for these powers to kick in soon. But Germany - worried it'll end up footing the bill for strugglers - is in no rush. There's no decision either on how to share the burden of winding down failed banks. And there's a potential conflict of interest between the ECB's roles as supervisor and guardian of monetary policy - all obstacles still to be tackled. A deal may be in place but it's not quite as comprehensive as some had hoped.