Italy is ready to make a peace offering on Europe’s banking push

Bloomberg

Italy may be willing to compromise on its holdout against a German plan for further integration of the European Union’s banking system that includes setting limits on holdings of sovereign debt.
Vincenzo Amendola, Italy’s minister for European Affairs, said in an interview in Rome that he is confident that a “good compromise” can be found in the next month. He also said that Italy won’t delay a long-agreed reform of the EU’s bailout fund.
Under the plan tabled earlier this month, Germany would consider more cooperation on guaranteeing deposits in exchange for demands such as stricter rules on banks’ sovereign debt holdings. Italian finance minister Roberto Gualtieri has said the condition isn’t appropriate for the completion of the banking union.
“In negotiations, red lines are the starting point, then in the discussion you hope to find better compromises,” Amendola said. “We see some difficulties but I am optimistic.”
Europe’s banking union “urgently needs deepening” and Germany expects to see the first signs of progress by December in its push to speed up integration, according to Joerg Kukies, Scholz’s deputy. Work to create a common system of deposit insurance — the third stage of banking union — has been hindered by political disputes between EU members.
Euro-area finance ministers signed off on a legal text outlining changes to the European Stability Mechanism, the bloc’s bailout fund, in June. The reforms give the mechanism broader powers, including allowing it to serve as the lifeline for the currency bloc’s crisis fund for failing banks.
Despite pressure from the anti-establishment Five Star Movement, the government won’t delay the plan’s progress at a December 12-13 summit of EU leaders, Vincenzo Amendola said. “The government judgment is that this treaty has positive elements like fiscal backstop of $77 billion for resolution of possible issues linked to banks.”