European finance ministers failed to strike an agreement on reforming the eurozone, due to the strong resistance of Italy and Germany, a top official said Thursday.
Ministers were expected to agree on reforming the eurozone’s bailout fund as well as on a timetable to complete the EU’s banking union, but stopped talks after seven hours without a breakthrough.
Hopes had been to conclude in time for a final approval by EU leaders at a European summit on December 12 and 13.
Reform of the fund, the European Stability Mechanism, was widely expected but fell foul to opposition in Italy led by far-right leader Matteo Salvini and the populist Five-Star Movement, a partner in the ruling coalition.
“We have an agreement in principle for the reform of the ESM (European Stability Mechanism) that it is not final,” Eurogroup chief Mario Centeno said on Thursday, trying to put a positive spin on the broken down talks.
Created in 2012, in the heat of the eurozone debt crisis, the ESM is to become the bloc’s lender of last resort and was to see its financial firepower strengthened and its powers of supervision over countries in difficulty increased.
“The Italian Parliament will have the opportunity to have a look at the details and a final vote,” said Klaus Regling, head of the bailout fund.
He added that negotiations would continue.
EU finance ministers also failed to agree on a plan to complete the banking union, a long delayed post-crisis project.
German Finance Minister Olaf Scholz last month raised hopes that Germany had reversed years of policy by backing the idea of a common European deposit insurance, the missing piece of a banking union.
But Scholz this weekend failed to take over the presidency of the German Social Democrats and weakened, was forced to backtrack on his willingness to move forward on the scheme, known as the European deposit insurance scheme, or EDIS.
“We did not endorse a roadmap on EDIS in yesterday’s meeting. This is not yet that political moment,” said Centeno.