BRUSSELS: European Union governments and parliamentarians will try to reach a compromise this week on how to wind down failing banks, in marathon talks intended to settle who decides to close banks and who picks up the bill.
A deal in the negotiations, set to span three days, would be the final step in a European banking union that would mean one supervisor for all euro zone banks, one set of rules to close or restructure those in trouble and one common pot of money to pay for it.
The banking union, and the thorough clean-up of banks' books that will accompany it, is meant to restore banks' confidence in one another and boost lending to other businesses and households.
New lending has been throttled by banks' efforts to raise capital and reduce the bad loans that proliferated in the recession triggered by the global financial crisis and deepened by the euro zone's own sovereign debt crisis.
Policymakers agreed last year that the European Central Bank (ECB) will be the single supervisor for all euro zone banks and the ECB will take on its new responsibilities from November.
But talks on a single European agency to wind up or close failing banks, and on a single fund to back it up, have entered a crucial stage: EU governments, represented by finance ministers of the 28-nation bloc, and the European Parliament must reach a deal next week.
If they don't, there won't be enough time to complete the legislative process for the resolution mechanism before the last sitting of the current parliament in mid-April. The key law would be delayed by at least seven months, probably more.
"The ground is very well prepared, now we have to show political will. We will stay there (in the meeting) as long as it takes to find a solution," one EU official involved in the preparations for the talks said.
"It's clear to all EU member states that if we want to achieve an agreement there's only one direction to go - to try to accommodate the parliament," the official said.
The problem is that European governments and the European Parliament want different things.
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