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One step closer to banking union

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One step closer to banking union

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Eurozone finance ministers have agreed on how and when their bailout fund, the European Stability Mechanism, can save banks. They have also set conditions for the rescues and said that a retroactive application for ESM assistance will be decided on a case by case basis.

It is hoped that the €500 billion fund will restore confidence in the banking sector, which has been ravaged by three years of debt and financial crisis.

The German Finance Minister, Wolfgang Schaeuble, said that an important step had been taken on the road to a banking union”. He added that the ESM can only be a “last resort” lender for member states and it must be under “tight conditions”.

The deal goes some distance from seperating problem banks from their governments, however does not break the relationship as called for by the euro summit last year.