ECOFIN agrees - so the famous year-end deadline for agreeing the SSM may be met. BUT – and it is a very significant BUT – the little word "unanimous" has crept into the ESM’s decision-making mechanism for a request to recapitalise any of these banks.
For the ECB, an obvious step to avoid the risk of an early collision between bank supervison and monetary policy roles would be taking charge only of proven `good banks’.
The ever-closer union genie is out of the bottle completely now and it does not need a particular timetable for it to progress powerfully. Assuming Mrs Merkel is re-elected in September, she spelt out to the European Parliament in November a `federalist’ agenda for the future of Europe that included the possibility of a further Treaty change. The contents of any such change will be the moment of `federal’ truth.
But in the meantime there are several litmus tests to be passed to check the actual sincerity of the eurozone’s leaders. It is this patient, step-by-step reform that will raise the competitiveness of the euro area economies that will be the permanent solution of the crisis. That is the pre-condition for major federal steps in the years ahead.
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