Juncker Warns Nations of Danger If Resolution Pact Not Sealed

  • Italy, Belgium, seven others urged to ratify agreement
  • Procedural snags are `weak reasons' for delay, Juncker says

Italy, Belgium and seven other nations need to move fast to ratify a euro-area pact on how to pay for bank failures so that the new system can start on Jan. 1 as planned, European Commission President Jean-Claude Juncker said.

Nations need to sign off on the Single Resolution Mechanism, including its accompanying fund, by the end of the month to avoid leaving a hole in the currency bloc’s new banking union, Juncker said in a Nov. 24 letter to the nations in question. “Let me spell it out,” he wrote, a “half-baked” resolution system is not part of the EU’s collective vision.

“It would be both disappointing and damaging not to have the Single Resolution Mechanism fully in place from Jan. 1, 2016,” Juncker wrote. “I appreciate that national legislative and administrative procedures can be very complex, but to the outside world, they will appear very weak reasons for a delay.”

The letter went to Italy, Belgium, Malta, Ireland, Estonia, Greece, Luxembourg, Slovenia and Lithuania, according to an EU official who asked not to be named because talks between nations and the commission continue. Lithuania, Slovenia and Ireland responded by sending ratification instruments right away for the intergovernmental agreement on the transfer and mutualization of contributions to the Single Resolution Fund, the official said.

Juncker said countries need to follow through on their commitments given the “delicate and contested” nature of designing the new system in 2014. The euro area set up a banking union, starting with centralized supervision from the European Central Bank, after the currency zone’s financial crisis caused five of its members to need bailouts.

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