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"The first thing to be created will be the supervision," Draghi told a committee of the European Parliament. "We are talking about the long-term sustainability of the European monetary union. We are going as fast as we can. It is better to do things right than in a hurried fashion. We certainly want to see this thing wrapped up by the end of the year," he said, referring to banking oversight. "By the end of this year we will have something that is not perfect, but achievable." EU Economic and Monetary Affairs Commissioner Olli Rehn said the European Commission would put forward legislative proposals for the creation of a "Single Supervisory Mechanism" for banks in the euro area, involving the European Central Bank, in early September. The creation of the central bank supervision will allow the EU's firewall fund to recapitalize banks directly rather than lending the money to a country's government
-- something that increases the country's debt load. "Direct bank recapitalisation will enable us to break the vicious circle between banks and sovereign risk," Rehn said. Officials also announced that Klaus Regling, a German economist who currently heads the temporary EU bailout fund, had been chosen to head the European Stability Mechanism
-- the permanent bailout fund meant to head off instability in the eurozone. Regling, 61, will take charge of a bailout fund meant to reassure markets that the European Union will stand behind its weaker members. Ministers said the final decision on Greece's request to renegotiate the terms of the country's bailout agreements will depend on the conclusions of the so-called "troika" of debt inspectors currently overseeing the Greek program. "Final decisions can only be made when the facts and figures from the troika are on the table, but in general it is clear that they will stick to the program that Greece is now undergoing," Austrian Finance Minister Maria Fekter said. Greece has had to impose harsh austerity measures, including big cuts to pensions and salaries, to secure billions of euros worth of rescue loans from the IMF and other European countries that use the euro and avoid bankruptcy. The finance ministers also reelected Juncker to a new 2 1/2 -year term as president of the eurogroup. But Juncker said he would step down late this year or early next year.
[Associated
Press;
Don Melvin can be reached at
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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