After endless pontificating, procrastinating and politicking, it seems the crisis in Europe’s financial system is finally wringing out some action from its national leaders. This is said with some sarcasm, but it isn’t easy to reconcile the idea of unity between the seventeen eurozone countries and action therein. In fact the rioting in Portugal, Spain, Ireland and Greece only highlight the fact that Europe’s leaders don’t know what to do. Until now, that is.
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Something had to give, and after many months of bandying the idea around that there should be a central bank supervisor – one with direct powers to intervene in problem areas, shoring up ‘infected’ banks – it’s finally happening. Germany is of course worried that the European Central Bank will meddle in their affairs, and the UK (the financial centre of Europe) will not be included at all in this momentous action (the Bank of England is also concerned that Europe will take key financial decisions without them.)
Despite the trepidation of some, this is at least a proactive stance that, if implemented properly, has the ability to directly save banks in eurozone countries without their governments being directly sucked into the mire. This new direction is also happening with a fair amount of speed, as it has to (lest we forget there is a crisis happening), but both France’s Francois Hollande and Germany’s Angela Merkel
assured the press that although different countries need different speeds of integration, this will all kick off in January 2013, albeit with the proviso of “quality takes precedence over speed.” But, as many analysts note, timing is crucial in order to start the rescue of ailing banks. This “single supervisory mechanism” will not be a panacea for Europe, but with a little luck, it adds a level of needed security to ailing institutions and sends a clear message to markets that Europe plans to stand together through thick and thin.