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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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