Merkel embraces idea of European banking union

Associated Press

BERLIN (AP) — Germany's chancellor says creating a European banking union can be a medium-term goal because the continent has to deepen its political integration.

Angela Merkel said Monday ahead of private talks with EU Commission President Jose Manuel Barroso that they will discuss how systemically important banks could be put under the supervision of a Europe-wide authority.

The proposal was floated by the EU Commission last week and would comprise a Europe-wide deposit guarantee. That would calm jittery markets, but rich countries such as Germany were initially lukewarm about it because of fears it could lead to them bailing out other countries' banks.

Merkel said the 17-nation eurozone "needs more Europe, not less" but initiatives like a banking union can only be "medium-term goals" and not quick fixes to the debt crisis.