Plans for an EU-wide banking union overseen by the European Central Bank, (ECB), lack required details to ensure they succeed, credit ratings agency Fitch warned yesterday.
The EU banking reforms aim to break damaging links between banks and their national governments.
Fitch’s managing director Bridget Gandy conceded guidance of the ECB “could help reinforce financial stability in the sector”. Yet in its present form, the plan lacked several crucial details. “There is still some risk it won’t happen,” Gandy warned.
Current proposals not only failed to mention any deposit protection scheme, or resolution mechanisms, but also neglected to explain how a single regulator could successfully govern the wide range of banking systems which can be found within the European Union. (EU)
Meanwhile, fears the ongoing euro crisis was damaging the United States’ economic recovery rose, as data revealed manufacturing output in the US fell for the first time in three years.
The Institute for Supply Management’s purchasing managers’ index (PMI) fell significantly from 53.5 in May to 49.7 in June. The significant drop in new orders is considered by analysts as an indicator of severe, future deterioration.
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