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Strengthening economic and monetary union: progress on legislative files

<p>Herman Van Rompuy, President of the <br />European Council and of the Euro Summit<br />© European Union</p>

Herman Van Rompuy, President of the
European Council and of the Euro Summit
© European Union

On 14 March 2013, the European Council took stock of ongoing work to build a sounder structure for economic and monetary union (EMU), as mandated by the European Council of December 2012. At the moment, developing the banking union is the most pressing priority, while President Van Rompuy will present further measures on the coordination of economic policies in the euro area for consideration by the June European Council.


Common banking supervision


Negotiations between the Council and European Parliament on the creation of a single supervisory mechanism (SSM) under the responsibility of the European Central Bank are at an advanced stage. The European Council regards the conclusion of the negotiations "within the coming weeks" as a priority.



Having the single supervisor in place is a precondition for the possible direct recapitalisation of banks by the European Stability Mechanism. The leaders stressed the importance of agreeing on the operational framework in support of this possibility by no later than June 2013.



Bank capital requirements   


Stricter rules on capital requirements for banks ("CRD 4" package) are being finalised. The European Council called for a final agreement between the European Parliament and the Council by the end of March.



Bank resolution and deposit guarantee schemes


The European Council confirmed the June 2013 deadline for agreement on more harmonised national bank resolution and deposit guarantee frameworks.



Single resolution mechanism


The Commission will propose, by this summer, a single resolution mechanism for countries participating in the SSM. This mechanism, which will include an effective backstop, is aimed at safeguarding financial stability in the event of bank failures and minimising costs to taxpayers. The European Council stated that the proposal should "be examined as a matter of priority", with the intention of adopting it by the summer of 2014.



Euro Summit rules of procedure


In the area of economic governance, leaders adopted the rules of procedure for the Euro Summits. These rules are part of the implementation of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union.



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