By DAVID McHUGH and JOHN-THOR DAHLBURG
Dutch Finance Minister Jeroen Dijsselbloem speaks with the media as he arrives for a meeting of the eurogroup at the EU Council building in Brussels on Thursday, Nov. 14, 2013, as finance ministers from the 17-country eurozone try to make progress on creating a banking union. The ministers need to agree before the end of the year on how to set up a fund to rescue banks. (AP Photo/Virginia Mayo)
Jeroen Dijsselbloem
Dutch Finance Minister Jeroen Dijsselbloem speaks with the media as he arrives for a meeting of the eurogroup at the EU Council building in Brussels on Thursday, Nov. 14, 2013, as finance ministers from the 17-country eurozone try to make progress on creating a banking union. The ministers need to agree before the end of the year on how to set up a fund to rescue banks. (AP Photo/Virginia Mayo)
Jeroen Dijsselbloem
Dutch Finance Minister Jeroen Dijsselbloem speaks with the media as he arrives for a meeting of the eurogroup at the EU Council building in Brussels on Thursday, Nov. 14, 2013, as finance ministers from the 17-country eurozone try to make progress on creating a banking union. The ministers need to agree before the end of the year on how to set up a fund to rescue banks. (AP Photo/Virginia Mayo)
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BRUSSELS (AP) — European officials took a step toward putting their debt woes behind them Thursday as Ireland said it needed no more financial help. But they were still divided on new measures aimed at preventing another country from running into the same kind of trouble.
The Irish decision to leave its bailout program on Dec. 15 shows “our policies for the stabilization of the European currency are significant and successful,” German Finance Minister Wolfgang Schaeuble said at the start of two days of meetings on the European economy and banking system.
In 2010, Ireland needed 67.5 billion euros ($90 billion) in loans from European countries and the International Monetary Fund after the cost of supporting troubled banks bankrupted the government. The Irish government said Thursday it would not ask for a standby credit line as a further safety net — a so-called “clean exit” from bailout purgatory.
Ireland was the first of Europe’s bailed-out countries to end a rescue program. Greece, Portugal and Spain are still on bailout programs requiring painful tax increases and spending cuts, a legacy of the crisis over government debt that began in 2009.
Finance ministers on Thursday discussed ways to strengthen the euro currency union’s banking system — and avoid a repeat of what brought down Ireland’s finances.
Specifically, they are trying to agree on a new agency that could order the restructuring of bad banks — so that other taxpayers don’t have to bail them out as the Irish did. But an agreement on the new agency has remained elusive.
No deal would mean leaving the issue for a last-minute summit in December. EU officials say an agreement is needed quickly so the agency can be passed into law before the current EU parliament’s term ends next year.
Diplomats in Brussels said they expected a final agreement was not likely at these meetings.
Key issues include the design of a centralized fund to be filled by levies on banks ahead of time, along the lines of the U.S. Federal Deposit Insurance Corporation. That would equip the new agency with money to carry a failed bank over until it is restructured as a viable one.
Germany, the EU’s largest member, says setting up such a fund would mean a years-long effort to change the basic EU treaty. Berlin wants to rely instead on a network of existing national bank authorities.
The European Central Bank, on the other hand, says no treaty change is required. The ECB has pressed to have the agency, dubbed the single resolution mechanism, set up by the end of next year. That means it would be in place when the ECB takes over as the centralized banking supervisor. It would be able to declare a bank in danger of failing — but without the resolution agency in place, there would be no new way to step in and clean up the mess. Previous bank failures have been handled by national officials.
The resolution agency and ECB oversight are part of so-called “banking union.” That is an effort to toughen banking oversight by centralizing it. National bank regulators are regarded as having been too easy on their home banks, allowing problems to fester. Banks that are still burdened by losses from more than five years of financial turmoil and recession are holding back the European economy because they can’t lend more to businesses.
