It was the 18th meeting of EU leaders about the economic crisis since it began, but maybe the most effective. German Chancellor Angela Merkel, under pressure from Spain, Italy and France, agreed to give struggling banks direct access to EU bailout funds without affecting government debt. Eurozone leaders also agreed a joint banking supervisory body, a step towards a banking union. We asked the views of ALDE leader, Guy Verhofstadt, and the leader of the ECR, Martin Callanan. Is it a step towards fiscal and political union in the eurozone? I think they're taking a very small step towards fiscal and political union. But some of the conclusions were very vague, there are still a lot of details to work on, and of course the key question of joint liability for debts and deposits has not been answered at all. This is not the fully fledged economic, fiscal and political union we need. For that it's necessary to establish an economic government in the eurozone, a treasury in the eurozone, a common bond market also in the eurozone, and that is still in discussion. Was this a climbdown for Chancellor Angela Merkel? I suppose there was a slight climbdown in terms of at least allowing the possibility of direct recapitalisation of banks. But there's still a long way to go. The details have to be worked out. The ECB has to take on the role of supervisor, etc. So there's a long way to go. The key questions have been avoided yet again. It is only limited. Why? Because if the funds are empty, they're empty, and there is no structural solution for the euro. So I still think that a eurobond market, eurobonds, a redemption fund or a partial mutualisation of the debt is absolutely necessary to rescue the euro. Is this the game changer Ireland believes and the markets demand? I don't think it was. There's been a slight decrease in the yields, but they're still well above 6% and not far away from the 7% level. For context, Britain and Germany are borrowing at less than 2%. So there's still a long way to go. There's been a slight difference. The markets like it initially, but we've seen this at previous summits. Initially the reaction is positive, people look at the details, doubts are expressed. Already the Netherlands and Finland have expressed reservations about the plans. I think we could see the details of it start to unravel over the next few months as they start to work on the precise implementation of it. I don't think it's possible to come to a conclusion yet. Remember that in December 2011 there was another so-called game changer. That was the LTRO 1 and LTRO 2 operations of the European Central Bank. In the end we only bought time at that moment, three months of time, and the crisis came back. So I don't believe that this is really solving the crisis if you don't have mutualisation of the debt. What else must leaders do to protect the euro? I think it's far too early to say. I think, again, once you start getting into the key question... Will the richer northern countries, whether it be in sovereign debts or in bank deposits, guarantee the liabilities of southern Europe? That's the key question and yet again that has been fudged. I'm negative on the fact that we have to wait for a new report in October, then a final report in December, before we can go further in that direction. That's why I think it's necessary now that the European Commission comes forward as fast as possible with a package of legislative proposals establishing such an economic, fiscal and political union, establishing also a eurobond market or at least euro bills or a European collective redemption fund. Will this lead to a two-speed Europe? We've always had two-speed Europes in that some countries will choose to take part in some mechanisms and not in others. In many respects, the euro is the epitome of a two-speed Europe. 17 countries are part of it, 10 countries are not. It's the same with Schengen - some countries are in, some are not. There's no question of the UK taking part in this banking union if it ever happens. So of course we're seeing a number of different speeds of integration and we'll see that exemplified in the months ahead. Everybody's talking about a two-speed Europe, but we've had it since the euro. So it doesn't make any difference in my opinion. But it's clear now that the eurozone has to become a fully fledged economic and political union as fast as possible. If we do that, and it's absolutely necessary to safeguard the euro, then automatically the difference between those inside and those outside the eurozone will grow and the difference will become deeper and deeper. <br /><br />EuroparlTV video ID: 0b504df8-7ecb-4461-9667-a08300e1585c
