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EU Puts Central Bank in Charge of Policing Lenders
With a proposal Wednesday to put the European Central Bank in charge of policing the more than 6,000 banks in the euro zone, Europe is taking a first step toward creating a system aimed at shielding individual countries from the fallout of bank failures.
The proposal is the beginning of an effort to replace the euro zone's patchwork of national banking systems and regulators with the uniform rules of a "banking union," which officials say is necessary to repair Europe's crisis-hit common currency. Yet even before the proposal was published, there was disagreement over the pace at which this should happen.
The struggle to pull Europe's financial sector closer together risks unsettling investors in coming months, even if the bloc successfully slides past two other potentially momentous events Wednesday. In the morning, Germany's top court will rule whether the euro zone's new bailout fund, the European Stability Mechanism, or ESM, conflicts with the country's constitution.
And by the late evening, provisional results will emerge after a general election in the Netherlands, which has been a leading advocate of austerity as the solution to the debt crisis. Prolonged coalition talks in The Hague could complicate the euro zone's efforts to reinvent itself.
This excerpt was taken from The Wall Street Journal. To be able to read the whole article, please visit this link.