European finance ministers made a concession to Germany that many smaller banks would remain under national supervision. To satisfy the French, they agreed that oversight of any bank in the region could be taken over at any time.
The French wanted all European banks to be held accountable. The agreement must be approved by the European Parliament but the fact that an accord has been reached has spawned a renewed spirit of unity among European nations.
Germany’s Chancellor Angela Merkel stated it was a significant step forward in bolstering trust and confidence in the euro.
The finance ministers also agreed to release the next installment payment, €50 billion, to Greece even though its debt buy-back program missed its target. The payment is critical for Greece to avoid defaulting on its debts.
The only caveat in the celebration was the pending turmoil over the future leadership of Italy.
Former prime minister Silvio Berlusconi has threatened to reclaim the post in an election next year. His policies are counter to the reforms put in place by current prime minister Mario Monti.
Berlusconi’s threat is enough to destabilize markets and renew financial crisis in the region.
ECB president Mario Draghi said the regulatory accord was a big step towards a stable economy, monetary union, and further European integration. The details of the supervision mechanism still have to be worked out.


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