The European Union's executive body is calling for a "banking union" to centralize efforts to deal with the region's economic turmoil – especially in Spain, which is racked by high unemployment and severe debt.
It's "an ambitious approach," according to Jose Manuel Barroso, president of the European Commission. The proposal also advocates for financial supervision and deposit guarantees across the euro zone.
"We intend to look at the further steps we need to take towards a full economic union to complete our monetary union," he said Wednesday. "It is very important for all the European citizens to understand this: There is no magic bullet, there is not going to be miracle solution, these issues take time and they require sustained effort and coherence."
The commission also recommended that Spain get until 2014 – an extra year – to meet its fiscal targets. It also suggested that the struggling country reform its banking sector, boost its retirement age sooner to help older workers re-enter the job market and cut through the morass of regulations that complicates business ventures.
Hand-wringing over Spain – whose Bankia lender said last week that it needs $23.8 billion in state aid – pushed the euro down to hover around $1.24 Wednesday, near a two-year low. Several other Spanish banks have recently been downgraded by credit agencies; more than half of young people in the country are unemployed.
Recent poll results have the anti-bailout leftist Syriza party ahead of its conservative opponents, which had held the lead this weekend.
A review of 12 member states Wednesday by the European Commission showed all of them – including France, Italy and the United Kingdom – suffering from macroeconomic imbalances. Economic sentiment plunged in the euro area in May, the commission said.
Given the instability, the idea of a "banking union" looks pretty good to the commission. Such a body could better supervise and, if necessary, rescue the eurozone's 17 countries compared to the current unsynchronized system of hodgepodge national regulators, according to Wednesday's proposal.
"In some areas we have made good progress – I can say the medicine is beginning to work," Barroso said. "But we are not there yet in terms of our goals, so we now need to redouble our efforts, at both the national and European levels. We need to move further and faster."