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Merkel Grand Coalition Would Ease on Banking Union, Fuest Says

Sept. 26 (Bloomberg) -- German Chancellor Angela Merkel may agree to a centralized European bank resolution system if she allies with the Social Democratic Party for her third-term government, Clemens Fuest, head of the ZEW economic research institute, said in an interview.

A so-called grand coalition of Merkel’s Christian Democrats and the SPD, Germany’s two biggest factions, “is likely not to stand in the way of a European resolution authority,” the head of the Mannheim-based institute said by phone. At the same time, Germany probably wouldn’t give up on its demand for disclosure of banks’ legacy assets as a prerequisite, he said.

If the two parties govern jointly, they would probably also ease the terms of aid loans made to Greece to stem the euro-area debt crisis by extending maturities and lowering interest rates, Fuest said.

To contact the reporter on this story: Birgit Jennen in Berlin at bjennen1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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