Euro zone finance ministers have reached a tentative agreement that would create a backstop to the EU's new bank rescue system in case it runs out of money in an emergency. The deal, characterised as a "crucial breakthrough", opens the way for an overall blueprint for dealing with failing lenders.
The "common position", reached after seven hours of talks that stretched into the early hours of Wednesday morning, will allow governments in need of extra funding to recapitalise or wind-down failing banks to access financing outside new bank-financed rescue funds – a key demand by a Paris-led group of euro zone countries that was resisted by Germany.
"We have reached a crucial breakthrough," said Olli Rehn, the EU commissioner in charge of economic affairs, adding that it should allow finance ministers from all 28 countries to reach a final deal on Wednesday and a "peaceful Christmas."
Although finance ministers did not disclose details, senior officials involved in the talks said the agreement is broken into two, with one backstop agreed for the "transition period" while a common EU bank rescue fund is built up – which could take as long as 10 years – and another for the "steady state" once the fund is in place.