By Gernot Heller
BERLIN (Reuters) - European Central Bank Executive Board member Joerg Asmussen has urged Germany's political leaders to press on with negotiations to form a new government in order to avoid further delays in crucial decisions for European integration.
The euro zone crisis and progress on the planned banking union will be among the main talking points at the upcoming autumn meeting of the International Monetary Fund in Washington, Asmussen said in a written response to Reuters questions.
Germany, the euro zone's biggest economy, has slowed the project for closer financial integration because of its federal election in September and Chancellor Angela Merkel's subsequent search for a coalition partner to secure her a third term.
"Swift formation of a government would certainly be helpful from a European point of view as there are important decision to be taken for Europe, for example on banking union," Asmussen told Reuters.
Time was short in the run up to the European Parliament elections next year, he said.
Asmussen, who was a deputy finance minister before joining the ECB last year, has been tipped by some media to become the next German finance minister, but said recently that he planned to fulfil his ECB contract, which lasts until the end of 2019.
The most pressing decision now was to agree by December on a common mechanism to wind down or restore ailing euro zone banks and Asmussen said the timetable was "ambitious, but manageable".
The ECB is particularly interested in having a single resolution mechanism in place by the time it starts supervising euro zone banks from late next year.
"Without doubt it is preferable for the common European supervision and the common European resolution to start roughly at the same time," Asmussen said.
EMERGING FROM CRISIS
Asmussen said Germany's international partners recognised the euro zone has made progress on emerging from the crisis. Spain was set to complete its bailout programme by the end of the year and probably Ireland as well, he said.
If Greece was not able to regain sufficient market access by the second half of next year, additional aid would be needed, as agreed in November last year, Asmussen said.
He reiterated that the ECB's Outright Monetary Transactions (OMT) bond purchase programme was still ready to be activated once the necessary preconditions were met - which was currently not the case for Italy.
"I would also like to point out that the OMT programme aims to counter unjustified fears about a breakup of the euro zone, rather than justified concerns about the functional capability of a political system," Asmussen said.
Italy's main problem was low growth potential and Asmussen urged Italy to continue with its budget consolidation.
One of the issues that is hotly debated as Germany forms its new government is the possible introduction of a minimum wage.
In contrast to his German colleague on the ECB Governing Council, Bundesbank chief Jens Weidmann, Asmussen said he was personally in favour of a minimum wage for Germany, noting that 21 European Union member states already had one.
"I think implementing this would also be useful for Germany because a third of employees were not covered by wage agreements and the low-pay sector has risen to about a fifth of employees," Asmussen said.
(Reporting by Gernot Heller; Writing by Eva Taylor; Editing by Stephen Brown)