Eurozone agrees bank supervision ... but not right away

The euro held steady on Asian markets Friday morning after European Union leaders agreed to appoint a banking supervisor in an overnight marathon meeting. But German Chancellor Angela Merkel succeeded in stalling French President François Hollande’s call for speedy action.

Reuters/Christian Hartmann

Merkel judged the timetable “very ambitious” but there is no date fixed for the start of central supervision of the eurozone’s 6,000 banks and concessions are to be made to Germany’s regional banks.

Although the legal framework will be drawn up by the end of the year the European Central Bank (ECB) has been told to work on the project throughout 2013.

A French government source told the AFP news agency that ECB will not supervise all of the banks until the beginning of 2014.

Ahead of the summit in Brussels, Hollande called for speedy introduction of the plan, which will make bailouts for struggling banks quicker and easier.

But Merkel called for “quality before speed” and succeeded in putting implementation off until after her country’s parliamentary elections next year.

In an interview with seven leading European papers, Hollande also ruled out Germany’s proposal of a “budget tsar” who could overrule national government on fiscal and spending policy and called for an easing of austerity policies.

On Friday he warned against “adding austerity to austerity” by imposing harsh conditions on Greece if it wants a European bailout.

Spain declared itself satisfied with the outcome, although it will be obliged to wait for the recapitalisation of its banks.

Eurozone leaders hailed “good progress” in Greece as a two-day general strike against austerity policies hit the country. A 65-year-old man died as police fired teargas on a protest in Athens on Thursday.

Greece quitting the euro is becoming less and less likely, according to Hollande, who declared that the worst is over thanks to the efforts to stabilise eurozone taken since June.

On a visit to Singapore on Thursday French Prime Minister Jean-Marc Ayrault compared  France's relationship with Germany to his marriage.

"The Franco-German couple - it's like with my wife," he told a student who had asked if relations were at a low point. "We discuss and we reach agreement."