What is a banking union?What is a banking union? This is Merkel's current strategy to solve the European Crisis. However, Germany disagrees with it. | |
What is a banking union?What is a banking union? This is Merkel's current strategy to solve the European Crisis. However, Germany disagrees with it. | |
1. A banking union foresees three steps:
- the ECB gets the power to monitor all euro zone banks and others in the wider EU that agree to the oversight;
-the establishment of a fund to close troubled banks; and
-a full fledged scheme to protect citizens' deposits across the euro zone.
2. Handing powers of supervision to the ECB also unlocks the possibility of direct aid to banks from the euro zone's permanent rescue scheme, the European Stability Mechanism (ESM), although it is not clear when Spain and others would benefit.
3. Under the terms of the proposal, the ECB would be put at the head of the current fragmented system of national regulators with the power to police, penalise and even close banks across the euro zone.
4. Germany, the euro zone's economic heavyweight, is opposed to allowing the ECB supervise all euro zone lenders.
5. Outside the euro zone, Britain is also concerned. Although it will not join the scheme, many international banks in London have operations in the euro zone which will be affected by the ECB's new supervisory reach.
6. For details, please read at:
http://sify.com/finance/Europe-to-ou...
.