German Chancellor Angela Merkel said a potential European resolution mechanism to wind down failed banks must not come at the expense of Europe’s taxpayers. A “solidarity fund” to support cash-strapped governments will serve primarily to boost competitiveness, Merkel also said after a meeting of European Union leaders today in Brussels.
On bank supervision and resolution:
“We need two things besides the supervision mechanism: once supervision is in place, which will be in March 2014, we need on the one hand rules for the direct recapitalization of banks that are supervised by the European supervisor.”
“Secondly, and that’s something Mario Draghi as president of the European Central Bank made clear today, we also need a legal framework to wind down banks that are under European supervision, if needed. It says very clearly in the documents that these resolution mechanisms mustn’t come at the expense of taxpayers but must be designed in a way that those who are responsible for adverse developments at banks carry the burden.”
On a “solidarity fund”:
“We’ve decided to sort out by June the details of how we can, on the one hand, sign contracts between the commission and member states to improve competitiveness and, on the other hand, possibly make financial resources available to support countries that are completely busy consolidating their budgets. The question of external shocks and such is not contained in the documents.”
“We’ve restricted ourselves to support related to the improvement of competitiveness.”