German Chancellor Angela Merkel said it’s an open question whether European policy makers can meet the deadline they’d set hours earlier to establish a euro-area bank supervisor by year-end.
“There are complicated questions to clarify and we’ll see in December if we complete it or not,” Merkel told reporters after a two-day European Union summit in Brussels wrapped up today. “For now, the political will is there.”
The comments underscore Germany’s go-slow approach that may stymie plan laid down in June to break the link between banks and governments that has worsened the region’s debt crisis. She also ruled out allowing Spain to shift bank-bailout loans off its balance sheet if they are made before the new system starts operating.
The European Central Bank is set become the currency zone’s main financial supervisor by Jan. 1, raising the prospect of direct aid to Spain’s banks during 2013, the 27 EU leaders agreed at the gathering. The system will phase in and could cover all 6,000 euro-area banks by Jan. 1, 2014.
The so-called banking union dominated talks at the 20th crisis-fighting European summit, nailing down a formula that Merkel and French President Francois Hollande worked out yesterday before the chiefs convened. Leaders praised Greece for its budget-cutting efforts aimed at securing its next aid installment. They sidestepped questions of when and how Spain might secure further assistance.
Spanish Prime Minister Mariano Rajoy said he’s not facing pressure to seek a sovereign bailout and he wouldn’t take any such pressure into account in any case. Spain already has secured a 100 billion-euro ($130 billion) financial-sector lifeline and has so far not sought to asked for aid that would unlock ECB bond-buying.
“I’m not going to take into account any pressure that people might exert on me, but frankly no one is doing that,” Rajoy told reporters. “I don’t see any European Union leader telling me I should use the mechanism the ECB has put in place.”
Spanish 10-year bonds pared gains today after Rajoy downplayed the prospect of a bailout. The yield on the securities was little changed at 5.34 percent at 1:55 p.m. in Brussels. It fell to as low as 5.26 percent, the lowest level since April 2. The euro slipped 0.2 percent to $1.3042.