A draft statement said: "A common backstop will be developed during the transition period.
The single supervisor should be matched by a single resolution authority to restructure or shut troubled banks; a single resolution fund (paid for by industry levies) to deal with any resulting costs; a single euro zone-wide deposit-guarantee system; and a common backstop.
Either way there will be a burden on taxpayers.Throughout the course of this year the ECB has been pressing the case for a resolution mechanism that would have a European authority at its centre and a common backstop drawing on euro-zone resources.
A true banking union requires three pillars: a single supervisor; a single resolution authority, with access to common backstop funds; and a joint deposit-insurance scheme.
The assets of Scottish banks are 12.5 times Scottish GDP whereas those in the rest of Britain are 4.3 times its GDP.Just as the fledgling euro banking union will require a common fiscal backstop if it is to be effective, so this would also be the case for a sterling banking union and the terms for such a backstop would involve some hard bargaining.
Without a full euro-zone banking union, including a common fiscal backstop to help resolve banks that get into trouble, that worrying bond cannot be broken.
At the same time, with the promise of a common banking backstop and some form of Eurobonds, the euro would at last start to look as if it could survive and the dangers of contagion would fall away.
From an IMF perspective, a banking union also requires a common fiscal backstop to deal with resolution of troubled banks and a common approach to deposit insurance.
Additionally, "actions toward a single resolution authority with common backstops, a deposit guarantee scheme, and a single rulebook, will also be essential," by mid-2013 athehe latest, the report found.
