“Maastricht 2” to save Spain and Cyprus?

Rapid degradation of the crisis in Spain and the news that Nicosia is about to ask the EU for financial aid, are forcing EU bureaucrats to accelerate the preparation of a medium-term timetable to reinforce economic integration, leading to budgetary and banking union, writes Lisbon economic newspaperDiário Económico.

There are rumors of a "Maastricht 2", a sequel to the treaty that laid the foundations of the single currency, which may be agreed at the summit of 28 and 29 June, following a proposal from the European Council Chairman Herman Van Rompuy.

This week the European Commission will formalize its proposal for a resolution for banks, a key step for the bank union that would allow the bank to self-finance future bailouts without recourse to taxpayer money. Other steps planned by Van Rompuy would include a guarantee fund of deposits at European level, a strengthening of banking supervision. But also the creation of a European budgetary authority, as suggested by the Spanish leader Mariano Rajoy on Saturday, which could include a European finance minister, a proposal that [former ECB head] Jean-Claude Trichet made a year ago.

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Diário Económico also adds that —

Angela Merkel aims to strengthen the powers of European institutions, in a centralisation of powers, and loss of sovereignty, and also a tighter coordination to ensure a labour market reform, social security and tax policy. Only then, Berlin seems to be willing to reconsider its opposition to Eurobonds, and only when the process is finished.