EU leaders agree to one banking overseer

EU leaders agreed to create a single banking overseer for the eurozone that could aid ailing banks, but Germany and Britain balked at some details. The 27 EU heads of state and government agreed "on a political framework for the end of 2012 and a gradual implementation in 2013" of a new EU single supervisory mechanism, European Commission spokesman Olivier Bailly said after the first day of a two-day EU leaders' summit on resolving the eurozone debt crisis. The commission is the EU's executive body. The European Central Bank was put into the framework as the region-wide banking supervisor, officials said, formalizing an arrangement the leaders agreed to at a summit meeting in late June. The new system would be phased in next year starting Jan. 1 and likely cover all 6,000 banks of the 17-nation eurozone by Jan. 1, 2014, an EC official said. It is intended to break the connection between banks and governments at the root of the euro crisis. The idea was eagerly supported by Ireland, Italy and Spain because it would set the stage for letting weak banks in those countries tap Europe's new bailout fund directly, without loading more debt on those countries' governments. But Germany was at odds with the EC over the scope of the proposed ECB supervision, saying it wanted the ECB's authority limited only to the biggest, "systemic" banks, the BBC reported. Britain, a key EU financial center, said it wanted safeguards to protect the powers of the Bank of England, Britain's central bank, the BBC said. As the leaders met, Greece, the eurozone state worst hit by the debt crisis, was gripped by another 24-hour general strike, with at least 20,000 protesters marching in central Athens amid clashes between demonstrators and police. The Greek government must agree on an additional $18 billion in budget cuts in government spending, pensions and social benefits, as well as make structural reforms, if it wants to get the next $41 billion bailout installment.