G-8 urges Europe to follow up bank reform

ENNISKILLEN, Northern Ireland - Reuters

The eurozone came under pressure from other rich economies on June 17 to press on with a banking union and Japan was urged to follow up on massive central bank stimulus with structural reforms and measures to tackle its budget deficit.

Leaders of the Group of Eight rich nations, which include Germany, France and Italy, said a further strengthening of the rules underpinning the euro zone, including moves toward a banking union, was “strongly needed.”

Eurozone finance ministers are due to discuss Europe’s banking union plans tomorrow ahead of a European Union leaders’ summit next week.

European officials are seeking to design a scheme to close troubled banks to complement a new system of cross-border supervision led by the European Central Bank from next year.Germany, the eurozone’s largest economy, has long worried that it could face potentially unlimited liabilities if countries in the single currency area pool their funds to cope with failing banks in the future.

In a statement which will form part of a final communique at a summit in Northern Ireland, the G8 leaders said the euro crisis had abated but the single currency area remained in recession, underscoring the need for reform.

The G-8 also said Japan needed to address the challenge of defining a credible medium-term fiscal plan.“Japan’s growth will be supported by its near-term fiscal stimulus, bold monetary policy and recently announced strategy for promoting private investment,” it said.