German Chancellor Angela Merkel told an audience of
conservatives in Munich late Friday there would be no
recapitalization of eurozone banks until a planned banking regulator
was up and running.

The chancellor, who flew directly from the European summit in
Brussels, highlighted her success in delaying the start of the
agency, telling the annual conference of her sister party, the
Christian Social Union (CSU), that this would ensure better
regulation.

“A regulator only makes sense if it is better than anything we
have today. If this regulator is yet again just quickly cobbled
together, if this regulator is not constructed carefully … then we
might as well not do it at all,” she said.

“That is why I put the stress on doing things step by step: first
a legal basis, then the practical implementation, and only when the
practical implementation gets to the point where it is able to work,
only then can there be a recapitalization of banks,” she said.

The CSU is Bavaria’s counterpart to the chancellor’s centre-right
own party, the Christian Democratic Union (CDU).

The popularity of the CSU, which currently rules Bavaria in
coalition with the pro-business Free Democratic Party (FDP), has
risen, a GMS poll for Sat.1 television showed. With 48-per-cent
support, it stands a good chance of winning state polls next year.

With a federal election also due within a year, the CDU and CSU
have put aside earlier policy squabbling and closed ranks to step up
attacks on Germany’s main opposition party, the Social Democrats.

The CSU, which has often voiced doubts about bailouts to eurozone
deficit countries, passed resolutions Friday that broadly support
Merkel’s current efforts to shore up the eurozone.

The party leader, Bavarian Premier Horst Seehofer, acclaimed
Greece’s progress in cutting spending and liberalizing its economy,
saying the effort was beginning to yield results and “economic
imbalances in Europe are receding.”

In his speech, Seehofer indicated he would not rule out fresh
financial aid to Greece.