EU official calls for steps over banking union

European Economic and Monetary Affairs Commissioner Olli Rehn talks to Ireland's Finance Minister Michael Noonan (R) during an euro zone finance ministers meeting in Brussels May 13, 2013. [Photo/Agencies]

BRUSSELS - Olli Rehn, the European Union's (EU) economic and monetary affairs commissioner, late Monday called upon EU countries to take the next steps over the banking union.

"I believe our work on establishing a banking union will be one of the most crucial tasks at European level over the coming months and years for creating the foundations for growth and jobs," Rehn said after a meeting of eurozone finance ministers.

"Completing the repair of the financial sector is not only about bailing out bankers. It is about letting credit flow to unleash investment that is essential for a sustainable recovery and job creation," Rehn said.

However, Germany urged caution as the country's finance minister Wolfgang Schaeuble wrote in Monday's Financial Times that setting up a common bank rescuing authority would require changing EU treaties.

"We should not make promises we cannot keep," Schaeuble wrote in the article, pointing to cooperation between national agencies as a possible solution before all conditions are met for establishing a banking union.

Rehn argued that the common bank-resolution mechanism and fund could be introduced within the existing legal framework and legal experts were looking into the issue for a definitive answer.

Echoing Rehn, French Finance Minister Pierre Moscovici said as he arrived at the meeting earlier Monday that Europe "must go as far as possible" within existing treaties and then look at what might require legal changes.

While acknowledging that "the Germans are putting forward understandable questions which will have to be dealt with on the way forward," Eurogroup President Jeroen Dijsselbloem argued, "But I don't see why that should retain us from making progress on the banking union."

Dijsselbloem said at the same press conference after the meeting that, "good progress" is being made on banking union. "I see strong commitment amongst all colleagues," the Dutch finance minister added.