European Union leaders have announced they had agreed to create a single supervisor for banks in countries that use the euro, and said it would “probably”’ become operational sometime next year.The deal, reached at a summit of EU leaders in Brussels on Friday, represents a shaky compromise between the Germans and French, who had been tussling over how to shore up the eurozone’s banking system.France has been pushing to get all 6,000 banks in the 17 countries under the supervision of one European body by the end of this year. Leaders agreed in June that, once a supervisor is in place, struggling financial institutions would be able to tap Europe’s emergency bailout fund, the European Stability Mechanism, directly.At the moment, money to help put banks has to go through a country’s government - placing more strain on state finances.In Ireland’s case, the government’s attempts to rescue failing banks forced it into a bailout. Some fear Spain could face that fate, too.But Germany’s Chancellor Angela Merkel, wary of using taxpayers’ money to prop up other countries’ banks, tried to put the brakes on the plan, insisting that creating the supervisor should be done slowly and that “quality must come before speed”.‘Worst is over’The compromise included something for both - all 6,000 banks will be included, as France had wanted. But there is no firm deadline for the single supervisor to be up and running - other than to say that the “objective’” is to finish the legal framework by January 1, and that work on its operational implementation “will take place during the course of 2013”.Herman Van Rompuy, European Council president, said the single supervisor would “probably” be up and running next year.“It is not because you vote on a law that you have the whole logistic framework in place the day after,” Van Rompuy said.Despite the lack of a deadline, Francois Hollande, French President hailed the agreement. “The worst is over,’’ he said, referring to the crisis that has shaking the European Union to its roots.However, there are still more issues under debate at the summit, which runs until Friday.
