POSTED: 04:00 a.m. HST, Nov 13, 2012
LAST UPDATED: 05:49 a.m. HST, Nov 13, 2012
BRUSSELS >> Shoring up Europe's banking sector and strengthening oversight of economic policies topped the agenda of a meeting today of the European Union's 27 finance ministers that was expected to expose divisions among the continent's powers.
Weakness in the banking sector and inadequate monitoring of national budgets were prime causes of Europe's three-year financial crisis. Fixing those areas is crucial not only to ending the current crisis but also preventing a repeat.
The Cypriot finance minister, Vassos Shiarly, who was chairing the meeting, called today's "a very challenging agenda."
The officials were discussing the setup of an EU banking union overseen by a single supervisor, as well as increasing capital requirements for banks. They were also were debating the sensitive topic of how to more closely monitor the draft budgets of EU members and correct excessive deficits.
The discussions, however, were expected to be contentious and highlight once again the difference in views among Europe's biggest powers on fundamental issues. Britain, France and Germany disagree on how to oversee their banking sectors. On Monday, ministers from the 17 countries that use the euro failed to agree on how to put Greece's bailout program back on track.
The discussions come at a time when European leaders think they are at long last beginning to emerge from the financial crisis, with market turmoil subsiding in recent months.
"The worst is behind us, although we can't be entirely certain," Italian Premier Mario Monti said today in an interview with French radio station Europe 1.
But while financial markets may have improved, the economy is in a poor state, and deteriorating.
Monti warned that European leaders need to act quickly to spur growth, the key ingredient that has been lacking in much of the continent as it tries to get its finances back in balance.
Official figures due later this week are expected to show the eurozone fell into recession — technically defined as two consecutive quarters of economic contraction — in the third quarter. Even Germany, the continent's largest economy, is slowing, as was evident in an unexpected drop in the ZEW survey of investor confidence today.
Another unresolved issue in Europe's crisis is how to get Greece's public debt down so the country can eventually survive without bailout loans.