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Banking union to top EU summit agenda

Published time: June 25, 2012 09:04
Edited time: June 25, 2012 13:04
From L) Spanish Prime Minister Mariano Rajoy, French President Francois Hollande, German Chancellor Angela Merkel and Italian Prime Minister Mario Monti take place for a joint press conference following their meeting on June 22, 2012 at Villa Madama in Rome (AFP Photo / Alberto Pizzoli)

From L) Spanish Prime Minister Mariano Rajoy, French President Francois Hollande, German Chancellor Angela Merkel and Italian Prime Minister Mario Monti take place for a joint press conference following their meeting on June 22, 2012 at Villa Madama in Rome (AFP Photo / Alberto Pizzoli)

European leaders gather to discuss a proposed cross-border banking union and the options of a debt redemption fund at the EU summit in Brussels this week. They see growing global pressure to find a solution for the euro crisis.

­The EU officials said they need to focus first on creating banking union in order to deal with failing European banks. The EU leaders proposed to set up a single European banking supervisor as well as to work out a common deposit-guarantee scheme and a single bank-resolution fund to boost banking integrity, according to the pre-summit paper.

Mulyani Indrawati, Managing Director of the World Bank has called the proposed banking union a fundamental issue to maintain the eurozone’s unity. “If you want to maintain the euro you also have to address the decision on banking and call for banking union there,” Mulyani told RT. “The consequence should be the fiscal union and then it’s going to be a political union.”

Spain will formally request a eurozone lifeline for its banks on Monday days ahead of the summit.

European leaders are also going to discuss the issue of mutualisation of debt of the euro countries and setting up a joint debt redemption fund to deal with the common burden. The idea was proposed by France, Italy and some other currency union members, but is rejected by Germany.

The agenda of the summit which takes place 28-29 June has been drafted by European Commission President Jose Manuel Barroso, European Council President Herman Van Rompuy, European Central Bank chief Mario Draghi, and Jean-Claude Juncker, head of the Eurogroup.

Though no decisions are expected to be announced at the summit, European authorities are facing pressure to find some ideas to push ahead. They are going to offer a more concrete set of measures by the next EU leaders' summit in October.

Meanwhile Greece’s new Prime Minister Antonis Samaras and new Finance Minister Vassilis Rapanos will miss the crucial EU summit due to the health problems. Samaras underwent eye surgery on Saturday has to stay at home for a while and Rapanos is in a hospital after collapsing.

The Foreign Minister Dimitris Avramopoulos and outgoing Finance Minister George Zanias will attend the June 28-29 meeting and ask for an easing of the terms of the €130 billion bailout.