EU finance ministers in stalemate over euro crisis

Michel Barnier, the EU commissioner (AFP)

European Union finance ministers made little progress in settling differences about how to deal with the growing sovereign debt crisis yesterday, amid continuing fears that Greece will default on its debt.

At their meeting in Wroclaw, Poland, which attracted thousands of protesters, they continued to squabble over a financial transaction tax and boosting the eurozone's rescue fund.

The governments are under pressure to shore up banks in the face of concern about the industry's capital levels, access to funding and earning power in a slowing global economy.

Michel Barnier, the EU's commissioner for financial regulation, said that the 2011 bank stress tests were an improvement over last year's, but "we must also acknowledge that the tests did not restore the credibility in banks' strength in the way we would have hoped". The Spanish Finance Minister, Elena Salgado, said ministers recognised the need for "more uniform and ... more rigorous" tests.

The bailout deal has been held up by sparring national interests, including demands for collateral. The issue gained urgency amid fears that Greece could default and be expelled from the eurozone after failing to meet budget targets agreed last year.

On Friday, the US Treasury Secretary, Timothy Geithner, urged Europeans to overcome damaging divisions and remove "catastrophic risk" from markets. Negotiations over a plan to introduce a financial transactions tax met resistance from the UK and Sweden after the US signalled it won't back the plan.