video transcript

It was supposed to be a cornerstone for Europe's approach to the debt crisis - a symbol that it means business - but a banking union is proving elusive. Divisions over how to supervise a new regime emerged as the region's finance ministers met in Brussels. Sweden's finance minister, Anders Borg (SOUNDBITE) (English) SWEDISH FINANCE MINISTER ANDERS BORG SAYING: "If we're going to find a compromise all doors must be open. We must be ready to maybe consider a treaty change. We must consider whether this supervision authority wil be outside of the ECB, and all of these options must be in the process." Under the European Commission's plan, the ECB would monitor all euro zone banks, along with others in the wider EU. There'd be a fund to close banks in trouble, and bank customer deposits would be protected. And it would allow the euro zone's rescue fund, the European Stability Mechanism, to help troubled lenders directly rather than via their governments. But, says ING economist Carsten Brezski, it's the ECB that's the problem. SOUNDBITE (English) CARSTEN BRZESKI, ECONOMIST, ING, SAYING: "Think of a country like Poland - if the ECB was to supervise Polish banks and there is no Polish central bank governor within the governing council of the ECB, that is an issue. How can you delegate responsibilities, give the ECB a strong role but probably what could happen is that we see another committee popping up, a new bank supervision committee so that these issues will be solved." There are two other major sticking points - Britain and Germany. London is worried that even though it's outside the euro zone, its international banks would be affected. It also fears the ECB will impose regulations that might threaten its status as Europe's financial capital. And Germany - Europe's biggest economy - wants fewer banks to be involved because it doesn't want to end up footing the bill for the closure of troubled banks. All 27 EU countries need to agree to centralising the region's banks - and any plan won't help Spain's banking sector. Its aid has already been agreed and will come in the form of loans which will add to its public debt burden.