While all eyes were on European Central Bank president Mario Draghi's press conference following the ECB monetary policy meeting, the European Union announced a plan for a European banking union.
CNN reports that the European Union has announced a plan for a continent-wide banking union that would deal with future banking crises rather than leave them in the hands of already struggling national governments.
The proposal would include a single EU deposit guarantee organization covering all banks in the union, something similar to the FDIC that covers U.S. bank deposits. There would also be a common authority and a common fund that would deal with bailouts needed for the cross-border banks that are major players in the European banking system.
In addition, there would be a single EU supervisor with ultimate decision-making powers for the major banks, and a common set of banking rules.
"Today's proposal is an essential step towards banking union in the EU and will make the banking sector more responsible," said European Commission President Jose Manuel Barroso in a statement. "This will contribute to stability and confidence in the EU in the future, as we work to strengthen and further integrate our interdependent economies."
The amount of the common bank rescue fund was not disclosed.
It is unclear how Europe will be able to achieve this grand banking union, but, if it does occur, rest assured that a grand inflation will eventually folly. The PIIGS really don't need a union, they need money.