LUXEMBOURG (AP) — Eurozone finance ministers on Monday sought ways to create a common fund to restructure or bail out troubled banks, an effort to keep financial problems in one country from endangering the entire 17-nation currency zone.
The ministers' discussions in Luxembourg were still in early stages, not least because of resistance from Germany and other countries that have paid the bulk of Europe's rescue programs.
The fund would complete Europe's planned banking union and help restore market confidence, but Berlin and others capitals have concerns about its legal basis and fear their taxpayers will be stuck with bills to clean up messy banks in weaker European economies.
Jeroen Dijsselbloem, who chairs the meetings of the Eurogroup of finance ministers, said the discussions were meant to make progress on technical details, but not yet to reach an overall agreement. Still, he acknowledged, "we need to provide full clarity soon."
Before the fund can become operational, European countries aim to set up a new banking authority with the power to restructure or unwind banks that went bust. That is expected to happen once the European Central Bank — in its new role as supervisor for the bloc's biggest banks — has analyzed all balance sheets to identify possible capital shortfalls by late next year.
"Taxpayers should be protected and financial stability maintained," said Olli Rehn, the EU's top economic official. He insisted the fund was only a last resort if capital markets and national governments cannot provide the necessary funds.
Separately, the officials also took stock of the reforms progress made in countries like Greece, Ireland, Portugal and Spain, which have received multibillion bailouts by their European partners and the International Monetary Fund.
Greece, which has been granted 240 billion euros ($325 billion) in emergency loans, again topped the agenda amid concerns over a projected financing shortfall of up to 6 billion euros ($8.1 billion) next year, according to ECB executive board member Joerg Asmussen.
"We must find a way to close this financing gap," Asmussen insisted.
Dijsselbloem said, however, a decision on Greece can't be made before December when creditors expect to have more complete data available.
Ireland and Spain, in turn, are both considered to be on track toward exiting their bailout program and return to refinancing their debt on markets from 2014 onward, Rehn said.
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