May 30, 2012

The eurozone should move to a banking union and consider directly recapitalizing banks from its permanent bailout fund, the European Stability Mechanism, says the European Commission.

­Commission President Jose Manuel Barroso told a news conference that tighter eurozone integration could include a banking union, a joint bank deposit guarantee scheme and euro-area financial supervision, saying the mood had changed since member states only months ago unanimously rejected a joint deposit guarantee fund.

The call for a banking union was made in the commission’s annual economic recommendations, outlining the economic strategy for the eurozone and particularly addressing the burning issue with Spanish debt, has sent stocks and the euro higher.

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