Eurozone finance ministers met in Luxembourg to discuss reform of the banking sector and a request by Cyprus to revise the terms of its ten billion euro bailout.
Austria’s Finance Minister Maria Fekter criticised Nicosia’s demands, saying “I can’t imagine that there’s a better alternative to what we have painfully agreed on all together. To question a contract we have made, and which has passed all national parliaments – including the Cypriot parliament – is a quite bold announcement!”
EU officials downplayed the chances of any changes to the Cypriot bailout.
They were also set to discuss how to make progress on creating a new regulatory framework to wind up ailing banks.
French Finance Minister Pierre Moskovici said: “France hopes that we can adopt the big lines (of the banking union) and that we will have a direct recapitalisation that has a real sense, and that doesn’t put weight on the depositors.”
But Germany said using the EU’s permanent bailout fund to inject funds into sick banks would require parliamentary approval in Berlin.
German Finance Minister Wolfgang Schäuble said:
“Before deciding on a direct recapitalisation of banks within the ESM, the German parliament would have to change its laws!”
Germany opposes creating a new centralised mechanism to wind down banks, fearing their taxpayers could pick up the tab.