The push for a European Banking Union

The warning by Mario Draghi, the president of the European Central Bank, that the euro is ‘unsustainable unless further steps are undertaken’ is about as stark as they come. I’m informed that what Draghi is pushing for behind the scenes is for the ECB’s remit to be expanded to include Eurozone financial policy.

This would lead to, to put it crudely, the creation of a European Banking Union. It would see the ECB take over from national governments when it comes to bank bailouts and the like. This would, in turn, ease some of the pressures on countries like Spain whose borrowing costs are being driven up by the market’s belief that it will need to recapitalise its banks very soon.

Again, the question here is whether Germany, which would end up bearing most of the burden, will agree to this. Certainly, the noises coming out of Brussels — Oli Rehn warning