ECONOMY

Merkel says EU bank watchdog will take time to set up

German Chancellor Angela Merkel said on Friday it would take more than a couple of months to develop a new banking supervisor for the eurozone, adding that it was important that events followed a certain order.

“We must stick to a certain sequence of events – first we must sort out the legal framework, then we need to set up a supervisory body and only once that is functional can banks be directly recapitalized by the ESM (European Stability Mechanism),» she said at a news conference on the second day of an EU summit in Brussels.

She stressed that the aim of clarifying the legal framework by the end of the year was ambitious but she added that the political will to complete this framework for a pan-European bank watchdog by December did exist.

European Union leaders agreed earlier on Friday a single supervisor would take responsibility for overseeing eurozone banks from next year.

Merkel said the eurozone needed an integrated budget framework and added that this would include a solidarity fund to boost competitiveness.

Merkel also said she had told Greek Prime Minister Antonis Samaras that his country had good chances to develop within the euro zone if it stuck to its reforms.

[Reuters]