Global Economics View:Did Summit Avoid Nadir?

Our preliminary assessment - These announcements made by the Council contained some positive steps towards banking union. In our view, however, many key necessary conditions for preventing a break-up of the EA remain unfulfilled, including (among others): boosting the inadequate size of the fiscal rescue facilities; a EA-wide bank resolution regime and an associated mutually guaranteed resolution fund or bank recapitalisation fund; a mutualised EA-wide deposit guarantee scheme that would also insure against redenomination risk; providing the fiscal rescue facilities with a credible funding backstop; and enhancing the accountability and political legitimacy of the European Central Bank and the European Commission, both of which are set to gain considerable authority