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While an agreement is unlikely today, it can be achieved by year-end as long as among European Union Member States don’t insist on a joint fund immediately, Schäuble said. “It’s not disputed in principle that we need a European fund", he told reporters at the start of two days of talks in Brussels. “A fund needs a levy” on banks, “but the levy needs a clear legal basis. There are different opinions on that, but if you want a safe legal basis, you’d better take the safe route.”
In addition to opposing the creation of a central fund as part of the initial blueprint of the SRM, Germany is also resisting Barnier’s suggestion that the European Commission should be the ultimate decision-making authority in the system.
A resolution agreement is possible for December, Luxembourg Finance Minister Luc Frieden said in an interview yesterday. Luxembourg is concerned about the decision-making process -- “who decides what when a bank needs to be wound down” -- and many countries have expressed concerns that will need to be solved before the proposal can move forward. “This is not just a German problem", Frieden said at the start of today’s meeting. “It makes no sense to conclude this topic today because the positions are too far from each other, but I am hopeful that we can have an accord by the end of year.”
Germany also has support on one point from non-eurozone country Sweden, which shares Schäuble’s view that the Council of the European Union, which represents national governments, should be the key decision-maker in the SRM. “It would be logical to have a Council solution", Swedish Finance Minister Anders Borg told reporters today. “We cannot have the Commission being player and referee in the same match.”
Dutch Finance Minister Jeroen Dijsselbloem said his government favours giving the final say on closing banks to the Commission, so that decisions can be made quickly. “Any conclusions on SRM won’t happen today", Dijsselbloem told reporters in Brussels. “I want to lower the expectations. It will be more like an exchange of opinions and as long as there is no government in Germany I don’t see progress.”
He also said EU ministers will announce which backstops stand behind euro area banks, and in what order, heading into next year’s bank balance sheet assessments by the ECB before it assumes its supervisory role. “We are working on a statement that will provide clarity to all participants on the order of the backstops", Dijsselbloem said.
Germany and France clashed at yesterday’s meeting over whether the statement should refer to the possibility of direct recapitalisation of banks from the €500 billion European Stability Mechanism, an EU official said. Germany opposes any explicit link from the ESM to the bank backstop plan, and Schäuble said direct ESM bank aid isn’t possible for now because it hasn’t been approved by Germany’s parliament. “That’s something that may be looked into later", he said. “The German legal situation rules it out now; that is well known. I’m not sure if everybody has taken note of that.”