Today's European leaders meeting, which again concluded over 2 hours past midnight Brussels time, showed some understandable differences on how to go about the next critical steps, such as a banking resolution, measure to reduce country's deficit and a budget for the whole bloc.
One of the notorious opposed members to see mutualisation of the debts after the ECB bank's oversight role, was German Chancellor Angela Merkel, who continues to play it safely against passing new liabilities for German taxpayers ahead of next year's national elections.
As Reuters notes, "a German delegation source said that in the summit room, she opposed a joint resolution fund for banks at this stage and rejected any big "fiscal capacity" to help euro zone states cope with economic shocks or reward them for structural reforms. Instead, she said EU countries should concentrate on consolidating their own budgets, according to notes of the meeting and an account provided by one participant."
Merkel, once out of the official meeting, told reporters that the bank union deal was a 'very important' decision taken by the EZ leaders, and that such agreement paves the way for future positive developments of a currency union. On the transaction tax, she suspects a solidarity fund for Euro zone states with limits 10 to 20 billion Euros
Also understandable was the reported approach by Spain and Italy's prime ministers, countries that continue sunk in a harsh austeritarian path while battling against an undesirable 5-6% yield on their 10-yr paper; both Mr. Rajoy and Mr. Monti tried to gain their counterparts's support in order to beef up funding in exchange for the discipline in economic reforms so far.
French president Mr. Hollande said once the summit came to an end that direct bank recapitalization in 1H 2013 would come under conditions, although reassuring that the bank supervisor will be up and running by March 2014, a somewhat contrarian two lines. Hollande added that the ECB regulation will most likely cover 95% of the French banking sector, while is expected to oversight as much as 82% of German banking.
EU's Juncker, during a brief speech in the conference room, mentioned that EU leaders were divided over the 'solidarity mechanism' with 'controversial' issues having to be resolved during the morning. Meanwhile, ECB's Draghi said progress was made on resolution mechanism.