Merkel urges more EU economic policy coordination

BRUSSELS (AP) — German Chancellor Angela Merkel insisted Thursday the 17-nation eurozone must give itself a stronger coordination of economic policies to remain competitive and spur growth.

Merkel's comments at the summit of European leaders in Brussels came as her government seeks to convince its partners to hand the EU Commission, the bloc's executive arm, more powers to oversee member states' economic policies.

"We are of the opinion that the current system of economic and social policy coordination is not sufficient," Merkel said after the talks.

With the worst of the eurozone's debt crisis — which has forced several countries into seeking bailouts — being over, Merkel warned the current lull may not lead to complacency since the bloc needs to beef up its institutions to be better prepared for the next crisis.

"We want a qualitative leap regarding the coordination of economic policies" for those using the common currency, she insisted.

Several countries, however, have expressed reservations fearing a loss of sovereignty if the EU Commission gets yet more powers to police national policies.

The EU's 28 national leaders also discussed the timeline for the next steps in creating the planned banking union, a set of new authorities and rules that aims at stabilizing the financial system.

They still disagreed over how to set up and fund a European authority capable of bailing out or winding down bust banks, the so-called single resolution mechanism. However, the leaders reaffirmed their commitment to find a solution over the next two months so that the relevant legislation can be passed before the end of the European Parliament's term in May.

EU nations have already agreed to set up a joint banking supervisor anchored at the European Central Bank. Before formally taking over that task, the ECB will review the assets of the bloc's biggest banks through 2014 to identify possible weak spots, such as insufficient capital. The ECB insists the resolution authority should be in place by the end of the review to prop up or shut down banks if necessary.

If that can't be achieved, every government, even those with weakened finances, will have to fend for themselves.

"Countries need to take all possible measures regarding the preparation of their national systems, so if serious issues surface from the bank reviews, that they can also be dealt with," said Dutch Prime Minister Mark Rutte on the way into the meeting.