Photo Gallery The Need for European Bank Reform
With Spanish banks teetering under massive debt, the need for a European-wide banking sector overhaul is growing. The national approach to the problem is failing. Here, Spanish Prime Minister Mariano Rajoy consults with European Central Bank President Mario Draghi in early May.
Many Spanish banks ran into deep trouble when the country's booming real estate sector collapsed in the wake of the financial crisis in 2008 and 2009. Huge debts are still on their books.
Many in Europe would like to see the European bailout funds equipped with the ability to lend directly to banks, without going through national governments. Germany has rejected the proposal.
Draghi said last Thursday that the bailout fund European Financial Stability Facility has "fallen short of both expectations and needs." He declined to detail exactly what he meant.
German Finance Minister Wolfgang Schäuble left a euro-zone finance minister meeting in frustration last Wednesday. The meeting focused on the size of the capital buffer that banks in Europe should be required to have in the future. In the end, the British were able to push their position through.
Europe's banking sector, particularly in debt-ridden states such as Greece and Ireland, as well as in Spain, is struggling mightily. Popular appetite for a European-wide bank bailout is limited in Germany.
Spain has become the most recent focus of the ongoing European debt crisis. The country is wary of asking for aid from the European bailout fund for fear of being cut off from international financial markets for the forseeable future.
Many economic experts and advisors believe that the European banking landscape needs to be coordinated and national supervisory agencies replaces by a strong European supervisory body. Here, protests against austerity in Spain.
