Brussels - Europe's latest plans for winding down failing banks may be too complex and inadequately funded, the head of the European Central Bank says as euro zone officials race to reach a deal on the thorny issue this week.
EU finance ministers want to agree on a blueprint for dealing with failing euro zone lenders before a summit in Brussels on 19 and 20 December to keep banking union plans on track and help restore confidence in banks after a four-year sovereign debt crisis.
But ECB president Mario Draghi questioned the strength of the plans that have emerged.
"I am concerned that decision-making may become overly complex and financing arrangements may not be adequate," he said.
Ministers and senior officials are set to meet daily this week to try to agree on what is called the single resolution mechanism for winding down failing banks.
Troubled banking
Deep divisions remain, especially over the single resolution fund, the related joint fund that is meant to cover the remaining costs of any bank closures after shareholders, bond holders and even large depositors have been hit.
This fund is to be filled by annual bank contributions that will reach about €55bn, but only after 10 years.
And while the point of banking union is to mutualise risk so that weak sovereigns are not left on their own to deal with troubled banking systems, Germany wants to minimise any liability of its banks or taxpayers for lenders elsewhere.
Berlin's views are reflected in the latest EU plan, in which the cost of closing down a euro zone bank would initially be borne almost fully by its home country.
The obligation of other euro zone countries will gradually rise until they are shared equitably - also only after 10 years.