Germany suggests '2-step' approach to banking union

German Finance Minister Wolfgang Schaeuble on Monday called for a "two-step approach" towards a European banking resolution mechanism, building on systems already in place in a number of countries. Amending EU treaties to create a resolution mechanism "takes time," Schaeuble wrote in an opinion piece in the Monday edition in the Financial Times. "Luckily, the alternative is not between a legally shaky resolution authority now and the postponement of repair work on the banks. A two-step approach could start with a resolution mechanism based on a network of national authorities," the minister suggested. "Instead of a single European resolution fund -- which the industry would take many years to fill -- such a model would lean on national funds, which already exist in several member states," he said. Last June, EU leaders pledged to create a banking union, but deep cracks have emerged since then with regard to how such a scheme should look and Germany in particular has raised doubts about its overall feasibility. The first step, to create a single bank supervisor under the European Central Bank, looks set to be in place by mid-2014, but a second pillar, a "resolution" agency and fund to close failed banks, is in doubt.