Sunday, June 10, 2012

UK Wants Safeguards If Euro Zone Forges Bank Union


Britain will demand safeguards to protect its financial sector if the euro zone forms a banking union, its finance minister said on Thursday, placing another obstacle in front of the European Central Bank's efforts to fix a deepening debt crisis, Reuters reported. In an interview with BBC Radio 4, Britain's finance minister George Osborne also urged the single currency bloc to use its bailout fund to recapitalise Spain's troubled banks. The ECB and its head Mario Draghi are pushing hard for the euro zone - and preferably the whole European Union - to set up a three-pillared 'banking union' consisting of central monitoring of banks, a fund to wind up big lenders and a pan-European deposit guarantee. But Britain and the rest of the European Union have clashed repeatedly over banking issues. Speaking just hours before Prime Minister David Cameron was due to discuss the euro zone crisis with German Chancellor Angela Merkel in Berlin, Osborne left little doubt about the country's position. "There is no way that Britain is going to be part of any euro zone banking union," Osborne said. "I think Britain will require certain safeguards if there is a full-blown banking union." Britain is determined to protect the interests of the City of London, its financial hub that provides a significant share of the government's tax revenues. Osborne said any significant steps towards common bank depositor insurance in the euro zone would require a treaty change, which in turn would need British consent.

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