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US: EU members must share risks, costs

Washington - The banking union being gradually assembled for the fragile eurozone economy must go beyond the planned centralized regulator and resolution process for failing banks, a US Treasury senior official said Friday in Washington.

To fully restore confidence in Europe's financial institutions, the banking union must further establish a capacity to recapitalise banks and forge credible deposit insurance, the Treasury official told reporters on condition of anonymity.

Those measures would require "significant" sharing of risk and cost among the eurozone's member countries. US Treasury Secretary Jack Lew is expected to discuss Washington's perspectives on the eurozone's long-running financial crisis during a transatlantic trip next week

He was scheduled to leave Monday evening from Washington for meetings Tuesday in Paris with President Francois Hollande and other French officials. Lew was expected early Wednesday in Berlin for talks with German Finance Minister Wolfgang Schaeuble, before Continuing later Wednesday to Lisbon to meet with Portuguese officials ahead of his return to Washington.

EU leaders and the European Parliament are at odds over how to wind down troubled banks. Bank resolution procedures are one pillar of the planned eurozone banking union. US urging for the eurozone to spread risks and costs is at odds with officials in Germany, the EU's largest economy, where the bailouts for troubled members of the currency zone have stoked political opposition to further sharing economic burdens from highly indebted countries.

Lew is expected to discuss the priorities for a eurozone banking union along with broader interests in boosting global growth and stability, the Treasury official said. Trade talks between the US and the European Union on forging the world's largest free-trade zone also are on the agenda.

The United States has a "strong stake" in European success, the Treasury official said. The trip next week will be Lew's fourth official visit to Europe since taking office 10 months ago.


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