"Before assuming the tasks of single supervisor, we have to be assured that we know the situation of the banks we take"
- Peter Praet, a member of the ECB governing board
Strong financial system and closer banking union is vital for European policy markets to prevent a rerun of the longest-ever debt and financial crisis. However, the European Union leaders are facing a deadline problem. A creation of a system to handle failing lenders is one of the key steps toward building a banking union. European leaders, however, are running out of time as a deal should be reached before European Parliament elections in May and until then the EU is facing a risk leaving the ECB lacking a crucial tool when it starts supervising bloc's lenders next year. The 28 EU countries have reached year-end deadline to make a consensus on a proposal by Michel Barnier, the area's financial-services chief, to create a Single Resolution Mechanism, which would handle European banks in financial trouble. However, the plan was highly criticised by Germany, which led the attack challenging plan's legal basis and stressing out it could weaken governments' control over their budgets. In September the European Parliament has voted in favour of centralized oversight for Europe's banking sector. During a full meeting of the parliament, European authorities approved the plan on bringing around 150 Europe's largest banks under the direct supervision of the European Central Bank. Only 62 out of 559 members voted against the plan, while 19 abstained. If a compromise is not made before the election between May 22 and May 25, the decision-making process could go into hiatus.
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