EU leaders have agreed on the need to strengthen the bloc’s Economic and Monetary Union at this month’s EU summit, but are awaiting details – or postponing discussion – on the most difficult proposals made.

Perhaps the most important gains of the week were achieved by the EU’s finance ministers, who agreed on the setting up of a single supervisory mechanism (SSM) for European banks at an Economic and Financial Affairs Council (ECOFIN) meeting from Wednesday afternoon to Thursday morning, before the eurozone’s finance ministers – the Eurogroup – agreed on the next instalment of bailout loans for Greece hours later.

The SSM would allow the European Stability Mechanism – the eurozone’s bailout fund – to recapitalise ailing banks directly rather than through national governments, meeting a key condition set out in proposals for a stronger EMU, with the eurozone at its core.

But these proposals, which were presented by European Council President Herman van Rompuy in close collaboration with the presidents of the European Commission, the Eurogroup and the European Central Bank, went much further, perhaps more than most EU member states were comfortable with.

The most far-reaching proposals include the setting up of a separate “fiscal capacity” for the eurozone, which could effectively translate into a separate budget, as well as an increasing degree on common decision-making on national budgets and an enhanced coordination of economic policies, particularly in the field of taxation and employment. For the time being, such proposals have been set aside by EU leaders.

Nevertheless, Prime Minister Lawrence Gonzi stressed that the summit was “another step forward for Europe,” while clarifying that the proposals aimed to spur discussion on the issue.

He noted that many countries – Malta included – would be awaiting more details on these proposals, since it was not clear whether some were acceptable or not as things stand. These details, he said, would enable discussions to continue.

The prime minister also welcomed the SSM agreement, pointing out that “this is not about banks, this is about millions of jobs,” which can be endangered by banks’ actions as the past few years have shown.

Read the full report in tomorrow’s edition of the Malta Independent.