EU leaders agree eurozone banking supervisor
EU leaders this morning agreed to the setting up of a new high-powered supervisor for eurozone banks - a vital step towards separating sovereign debt and State debt.
The agreement is a boost to Taoiseach Enda Kenny as he presses EU leaders to hold to their promises, including giving Ireland a bank debt deal.
But Mr Kenny chose not to specifically mention Ireland's debt deal, instead urging his EU counterparts to stick to the overall commitments given at their last meeting in June, which incorporated the promise to ease the country's €64 banking debt burden.
The law to set up the banking supervisor will be agreed upon by January and it will come into effect next year.
European Commission President Jose-Manuel Barroso said the European Central Bank will have a "fundamental role" to play in the new set up.
"The new supervisor will be able to intervene, if necessary, in any bank in the euro area," he said.
At a summit that finished up at 3am this morning, EU leaders also reiterated their commitment from June that it was "imperative" to break the link between sovereign debt and bank debt.
The banking supervisor must be in place before this can happen.
But there is still doubt over how the new EU bailout fund, the European Stability Mechanism, will be used to recapitalise banks.
And it could be some time before the banking supervisor has garnered sufficient trust among EU leaders to allow for the direct recapitalisation of banks.
German Chancellor Angela Merkel indicated she felt the supervisor would have to be in place for some time before agreeing to direct injection of ESM cash into banks.
Also, there is still a great deal of uncertainty in Brussels over what exactly the commitment given to Ireland to reduce the legacy bank debt burden actually means.
In other developments of value to Mr Kenny, international ratings agency, Fitch Ratings, signalled it may soon remove its negative view on lending money to Ireland, but an upgrade could be some way off.
And European Commissioner Olli Rehn said Ireland is "making progress" in negotiations on a bank debt deal.
Mr Kenny told fellow EU leaders that Europe had to show "a capacity for implementing agreements".
He said the EU had to prove that when heads of government come to an agreement, they were then followed through.
The Taoiseach said this would lead to confidence, which leads to stability, which leads to growth.
Rather than getting a fresh statement on Ireland's debt deal specifically, Mr Kenny is hopeful for agreement that the June 29th deal stands.
He also wants to see the other elements of that deal, such as a banking supervisor and growth pact, speeded up.
The Government's theory is these other measures must be in place before the Ireland's bank debt relief can be agreed.