Creation of Bank Watchdog Will Test the Euro Zone

Germany's Finance minister, Wolfgang Schäuble, has an uncanny ability to tread a very narrow line on formation of an EU banking union. He frequently crosses over the line in both directions but never very far, and never for long. Every time he gives an inch to solidarity, he quickly takes it back, and vice versa. And here we go again.

LONDON (Reuters) - The European Union's banking watchdog will have new powers to overrule the European Central Bank when the bloc's single market is threatened, a document obtained by Reuters showed. European Commission President Jose Manuel Barroso on Wednesday will present a blueprint for a euro zone banking union with the European Central Bank (ECB) as the main supervisor for the currency area's 6,000 banks. It is part of wider EU efforts to tackle a destabilizing debt crisis that has weakened lenders. ...

Banks that will be supervised by the new euro-zone bank supervisor will first have the strength of their balance sheets tested, a top euro-zone official said.

Banks that will be supervised by the new euro-zone bank supervisor will first have the strength of their balance sheets tested, a top euro-zone official said.

Voters in southern Europe have thus far signaled their willingness to endure austerity if that is the price for remaining within the euro zone.

LONDON (Reuters) - This time last year the European Banking Authority was fighting a losing battle with Germany's financial regulator, just seven months after it started work as the EU's new supranational watchdog charged with overcoming national differences to tackle the bloc's banking crisis. A year later and the EBA's very survival is in question as the euro zone's leaders debate whether nothing short of a banking union will break the death spiral that links the weak euro debtor nations with the banks whose debt they hold. ...

By FXstreet:The bearishness surrounding the single currency just passed a tough test in the wake of the ZEW Survey results for the month of February in both Germany - posting mixed prints - and the euro area, bettering January's reading and the median