BERLIN (AP) -- Germany's finance minister has called for caution as the European Union draws up plans to wind up failing banks, suggesting that the 27-country group risks losing credibility if it tries to set up a central rescue agency without changing the EU's treaties.
"We should not make promises we cannot keep," Finance Minister Wolfgang Schaeuble wrote in Monday's Financial Times, proposing that Europe should at first rely on cooperation between national agencies.
Officials from the European Central Bank have called for the establishment of a strong central authority backed by the financial firepower of a European fund to make decisions on unwinding banks. The fund and agency are key stages in building a Europe-wide "banking union" designed to stabilize the region's financial system.
Berlin, however, has argued that setting up such an authority would require changing European Union treaties — a potentially cumbersome and time-consuming process.
Europe's banking industry has been one of the main causes of the euro area's three-year financial crisis. Governments in countries such as Spain and Ireland had to step in to rescue their banks, which had been brought close to collapse by toxic property investments. These rescue attempts caused the governments' debt levels to increase to dangerously high levels.
Schaeuble wrote Monday that Germany will assess "with an open mind" a proposal to be presented next month by the European Commission, the EU's executive arm, for the creation of a mechanism to deal with failing banks. He warned that existing EU treaties "do not suffice to anchor beyond doubt a new and strong central resolution authority."
The minister argued that when a bank is wound up, money and jobs are usually lost, prompting those affected to seek redress — meaning that a new European authority would need a solid legal base.
"Amending the treaties takes time," he wrote. "Luckily, the alternative is not between a legally shaky resolution authority now and the postponement of repair work on the banks."
He also suggested that Europe could hurt itself by setting an unrealistic timetable for the union. Initial predictions that a single European banking supervisor — another core part of the banking union — would start work at the beginning of this year "cost the EU credibility," he wrote.
Germany was also adamant that the supervisor shouldn't be rushed into place. It is now expected to start work next year.
Schaeuble said a mechanism to make decisions on winding up banks, based on a network of national authorities, could start work once a European banking supervisor is operating. He said it would rely on national funds instead of a single European resolution fund, "which the industry would take many years to fill."
The result "would be a timber-framed, not a steel-framed, banking union," but that would buy time to create the legal basis for a more ambitious project with strong central authorities, Schaeuble said.
The minister's spokesman, Martin Kotthaus, said he wrote the piece because of "a perception that perhaps not everyone entirely understood" how Germany proposes to proceed.
Asked whether Germany has allies for its position, Kotthaus replied: "I see a broad basis for this, because everyone says we need these common rules, we need this common mechanism as quickly as possible."