PARIS:-French President Francois Hollande hailed on Thursday an EU banking agreement reached overnight that European Union officials hope will ring-fence banks in trouble to prevent future crises, terming it a “global” and “major agreement.”
A statement issued by Hollande s office called the deal “global because all banks will be concerned,” and said it “consecrated” the “will to collectively oversee the stability of the banking system in the eurozone and beyond.”
The statement added that the “major agreement corresponds to France s will to commit to a banking union, in a short time-frame, since it will be full and complete by early 2014,” and noted that the accord “clears the way for recapitalisation by a single supervisor.”
The new Single Supervisory Mechanism (SSM) should ultimately allow the European Stability Mechanism (ESM), the eurozone s new defence fund, to recapitalise struggling banks directly, bypassing governments so their sovereign debt burden is not increased.
The French presidency underscored that the banking union was agreed to just “a few days after finding a joint response to the financial situation in Greece.”
It said that the SSM was “a decisive step towards a definitive stabilisation of the eurozone, and towards greater confidence, a condition for the return of growth, for which France has worked tirelessly since the June 2012 (EU) summit.”
“Europe and the eurozone thus provide proof that they are able to meet the challenges they are confronted with.
“The president of the republic confirms that we are in the process of resolving the eurozone crisis and are fixing principles and regulations that will be determinant for the future.”