VILNIUS, Lithuania — Europe's finance ministers are working against the clock to solve the thorny but crucial issue of agreeing on further reforms to strengthen the region's banking sector.
Decisions on securing Europe's economy will be put on hold early next year as the region gears up for the elections to the European Parliament in May.
As finance representatives from the 17 euro countries gathered for a meeting of the Eurogroup in Lithuania Friday, Germany's Wolfgang Schaeuble warned that ministers were under "high pressure regarding the timing" in setting up a joint authority to restructure or unwind bust banks.
Governments must strike a compromise on the complex legislation by December, said the Netherlands' Jeroen Dijsselbloem, who chairs the meetings of the Eurogroup of finance ministers. If they fail, the legislation won't be able to clear all necessary hurdles before the European Parliament descends into full-time campaign mode in April.
"It's very important that we stick to that timeline," Dijsselbloem insisted.
At their meeting in in Vilnius, Lithuania, the ministers aimed to take stock of the countries' positions on how to establish and finance such an authority, but weren't expected to reach a decision yet.
The euro countries have already agreed to set up a centralized bank oversight to be anchored with the European Central Bank, legislation that the European Parliament approved Thursday. Setting up the so-called single resolution mechanism to deal with bust banks is seen as crucial step in completing the banking union, which analysts bill as Europe's most important initiative in turning the tide on the bloc's three-year-old debt crisis.
The banking union's ultimate goal is to make the supervision and rescue of banks the job of European institutions rather than leaving weaker member states to fend for themselves. Failing banks in the past have dragged down government finances and forced European Union countries such as Ireland or Cyprus into seeking bailouts.
Some countries — including the bloc's weaker southern economies but also France — are pushing for a powerful centralized authority complete with a common financial backstop to deal with bank failures. Others, led by economic heavyweight Germany, argue the EU's current treaties aren't a sufficient legal basis for the authority and instead have called for stronger cooperation between existing national mechanisms.
"All have the will to reach a solution as fast as possible," Schaeuble insisted. "That is a high pressure regarding the timing, everybody will have to move," he added.
While the talks in Vilnius were focused on trying to set up a more stable future for the eurozone's financial backbone, the problems resulting from its debt crisis still loomed large over their talks.
At their first meeting after the long summer recess, ministers were expected to take stock of the progress of reforms in Greece, which has received rescue loans worth 240 billion from its international partners after being shut out of bond markets. The will also discuss the way forward for Portugal, which is poised to exit its bailout program next year.
The finances of the tiny alpine nation of Slovenia, which is burdened by ailing banks and is viewed by some analysts as next in line to apply for a bailout, was also in the ministers' agenda. Slovenia insists it won't need a bailout as it has enough financial leeway to recapitalize its bust banks.
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