Speed up Europe banking union plea

In his last State of the Union speech before European Parliament elections next May, Barroso offered no new policy proposals but appealed to member states to redouble efforts to quell financial turmoil that has led to a drawn-out recession and soaring unemployment.

“What we can and must do first and foremost is deliver the banking union. It is the first and most urgent way to complete our union,” he told lawmakers in Strasbourg.

His comments were an implicit challenge to Germany, the EU’s leading power, which has worked to limit the scope of a single banking supervisor and slow the drive for a single bank resolution authority and fund, citing legal constraints and the wish to spare its taxpayers from liabilities for others’ banks.

The goal of creating a single framework and backstop for around 8,000 European banks, with mechanisms to wind down failed lenders and protect savers’ deposits, is one of the EU’s most ambitious and challenging projects.

EU officials and many financial market economists say it is crucial to strengthen a banking system shaken by the crisis and open the way for lending again to spur growth.

But efforts to implement it have stalled in the run-up to German elections on September 22.