This Reuters article on the forces of disintegration vs. integration in Europe is a good one. It concludes with a paragraph on the forces of integration being stronger. We cannot argue one way or the other. It is for history to judge, after the fact.
Veteran EU watchers say political determination to make the single currency irreversible will drive euro zone leaders to give birth to a full banking union, and the decision to create a joint supervisor effectively got them pregnant.
But, we would point out two caveats to this. One comes from a Deutsche Bank ‘Early Morning Reid’ of July 5, 2012, available, fortuitously on Internet:
The deal to get ECB involved in the arrangement is not settled yet. Even ECB officials don’t have a common position on whether bank supervision is an appropriate role for the central bank, according to the article. The Bundesbank is apparently worried that a supervisory role would make it harder for the ECB to maintain its primary function (ie price stability) and sees a potential conflict between supervision and monetary policy.
Then, the other one is what TGS blogged on last night. It is that direct injections of capital from bailout funds to banks have to be backed up by sovereign guarantees. Gavyn Davies had blogged on it and TGS had captured the relevant text. IF this is true, then the whole thing is just semantics. It also shows the near-impossibility of putting/achieving fiscal, monetary or banking unions ahead of political union.