Eurozone's Single Resolution Fund may face month delay

A new eurozone fund for troubled banks may face a one-month delay and not go live in January, a prospect that would be a major embarrassment for a critical element of banking union, its chair said in Dublin yesterday.

Eurozone's Single Resolution Fund may face month delay

The eurozone’s Single Resolution Fund will only become operational on January 1 if participating member states representing not less than 90% of the aggregate of weighted votes ratify the agreement underpinning it by Monday.

“All of you know how Brussels works, how member states work, there’s always big trouble until the end,” said fund chairwoman Elke Koenig.

“For the time being, I am still hopeful we will have the relevant votes by Monday night but it is definitely tight.

“Let’s keep our fingers crossed that we’ll get there. It is clearly critical. It would be a major embarrassment if we had to postpone by one month to become operational by February 1.”

A European Commission official confirmed that if the target is not reached by midnight on Monday, the new fund could not start up in January, even if ratifications were wrapped up a few days later.

The European Commission said after the nine countries yet to ratify the agreement were urged to do so earlier this week, only Luxembourg had yet to send an indication of when it would ratify the inter-governmental agreement while Ireland had done so this week.

The other countries that were sent reminder letters included Belgium, Estonia, and Greece. Luxembourg was the only country that is not co-operating, the spokeswoman said.

If Italy does ratify the agreement, the 90% target should be reached.

Under the banking union project, all large eurozone banks are now under a single supervisor, the ECB, and a common method of winding down banks that fail has been put in place, including the joint fund to cover the cost.

The fund will be financed from annual contributions from banks, but will only reach its target size of €55bn after seven years, which could have left it vulnerable if a banking crisis strikes at the beginning of its operations.

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