Schäuble suggests revising EU treaties to make way for banking union

FXstreet.com (Barcelona) - German finance minister Wolfgang Schäuble told the Financial Times today that the banking union could not be completed without a modification of EU treaties. The process of changing them however could last several months or even years.

According to Schäuble the existing treaties “do not suffice” to allow for forming a strong central resolution authority. Therefore he warned against making promises which the EU cannot keep, as they would directly affect its credibility.

“The EU does not have coercive means to enforce decisions” Schäuble said. “What it has are responsibilities and powers defined by its treaties.” A change to the treaties would provide a better separation of the ECB's monetary and supervisory functions.

The German finance minister is conscious that such changes might take a long time, so he proposed a two-step process consisting of a resolution mechanism based on a network of national authorities as well as a network of resolution funds.

Even though Schäuble acknowledges that such a structure would not be trons enough in the long term, he believes that it would allow to buy time and create the base for reaching the final objective: a European banking union, which encompasses the entire interior market.