THE DAILY TELEGRAPH: Germany's central bank has shot down EU proposals for a European banking union, warning categorically that eurozone liabilities cannot be shared without a fundamental shift towards fiscal and political union.
Andreas Dombret, a key board member of the Bundesbank, said the grand plan by Brussels is premature and unworkable as constructed. "It has to follow a deeper fiscal union as it would imply significantly increased risk sharing amongst countries."
Mr Dombret said a pan-EMU deposit-guarantee scheme and a debt resolution fund would require "a genuine, democratically legitimated fiscal union" and a new treaty.
The Bundebank's vice-president Sabine Lautenschlaeger hammered home the point in what is a clearly co-ordinated push to check the plan. "The result would be a pooling of the governments' liabilities through the back door," she said.
"Whoever is footing the bill must also have a right of control, particularly when it comes to the large sums that are seen in banking crises," she added, alluding to rulings by German courts that unquantifiable EU liabilities breach Germany's constitution.
Chancellor Angela Merkel endorsed the tough line at a party conference yesterday, insisting that Germany will not accept variants of debt pooling or eurobonds until Europe has created a machinery of joint government. » | Ambrose Evans Pritchard, International business editor | Tuesday, June 12, 2012
