Finance ministers put off decisions
European finance ministers have inched towards strengthening their banking sectors and the management of their economies at a meeting in Brussels, but put off decisions on comprehensive solutions to the region's financial crisis.
Weakness in the banking sector and inadequate monitoring of national budgets were among the prime causes of Europe's three-year crisis, which has seen several countries struggle with too much debt. Fixing those areas is crucial not only to ending the current crisis but also preventing a repeat.
European leaders have agreed, in theory, to cede significant amounts of sovereignty to fix those problems. As part of this plan, the European Central Bank will be put in charge of all of the banks in the 17 countries that use the euro by as early as next year. And they have proposed giving the European Commission, the European Union's executive arm, the power to review and even reject their national budgets to prevent against overspending.
But actually implementing those ideas has proved difficult. Germany, for instance, is wary of ceding control over its banks while Britain is nervous that a co-ordinated eurozone banking sector will have a greater say in discussions over regulations that apply to all 27 nations of the EU. And several countries are concerned about the voter backlash that would be sparked by handing too much power to the Commission.
After months of heightened activity over banking and economic oversight - a move that markets and investors have largely welcomed - it seems the EU has now put on the brakes while it hammers out the details.
Austrian finance minister Maria Fekter said, for instance, that creating a single supervisor for all the banks may require a time-consuming treaty change. That would knock the EU way off its timeline of getting a supervisor at least partially in place next year.
"I don't want to speed up without having discussed the best solution," she said. "Speed kills when we don't have the best solution."
It is unclear how long markets will wait, though. Official figures due later this week are expected to show the eurozone fell into recession - technically defined as two consecutive quarters of economic contraction - in the third quarter. Even Germany, the continent's largest economy, is slowing, as was evident in an unexpected drop in the ZEW survey of investor confidence on Tuesday.
"There is still the same lack of urgency that has sent the markets into a frenzy on numerous occasions in the past few years," said James Hughes, chief market analyst for Alpari.
Discussions on Monday among just the 17 eurozone ministers were also mired in disagreements that have held up the next instalment of bailout money for Greece. The discussion faltered over the timeline for bringing Greece's debts down to a manageable level.