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European officials are seeking to design a scheme to close troubled banks to complement a contentious new system of supervision in the eurozone led by the European Central Bank. The first leg of this banking union is due to be completed next year when the ECB takes on the supervision of banks. Now negotiations are under way to build the second leg - an agency to close banks with a central fund to cover the costs involved.
The European Commission is drafting the plan and, on Wednesday, commissioners from each of the European Union's 27 members met to discuss an early outline of the blueprint seen by Reuters. In it, officials suggest giving the European Commission and a newly-created agency powers to close banks were the ECB to spot a problem and, in the words of one person close to the matter, "ring the bell".
There would also be an industry-sponsored fund to pay for the clean-up or 'resolution' although it is unclear who would cover such costs during the years when this is being built up.
It is unlikely, however, that Berlin would accept the creation of a new agency in Brussels or elsewhere with powers to overrule its own national authorities on the sensitive issue of whether to save or close an ailing bank.