A eurozone fund could be in a position to share the costs of shutting down or rescuing banks in five years after Germany made concessions at a meeting of EU finance ministers in Brussels.
Initially, Berlin insisted that the fund, composed entirely of contributions from the financial sector, would have to reach its full amount of €55bn over 10 years before it could be united and used for any country’s banks.
In the meantime, Berlin insisted that the contribution of each country’s banks would be kept in separate compartments to fund only those banks with just gradual access to the other national compartments.
The member states are negotiating the final shape of the Single Resolution Fund with the European Parliament that is insisting on greater flexibility. German ministers agreed to give more leeway to their negotiators in a bid to get final agreement next month.
The issues of the number of years it will take for the fund to be mutualised, and whether the contributions to the fund must be increased to match the time scale, have not been agreed.
Finance Minister Michael Noonan said there was a lot of support for five years, while some preferred seven years, but he would be happy if it settled at five years.
Some counties favour having the full €55bn raised within those five years, increasing the contributions from banks.
However, even when fully funded, it would be small compared to the trillions of euro on the balance sheets of many banks across Europe, Mr Noonan said.
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