EU Draws Up Banking Union Proposal

The euro remained above $1.37 on Monday morning as the region's policy makers worked on an agreement on how to wind down struggling banks once the eurozone's banking union is put into place next year. Reuters reported that the EU has drawn up a proposal, which will presented at a meeting of the bloc's senior officials on Monday, that suggests that the cost of closing a bank should initially be covered by the bank's home country. However, over the course of 10 years, the contributions of other eurozone members will slowly increase and the burden will be shared.The eurozone banking union has been considered by most as a necessary step that the region must take in order to avoid another financial meltdown. Although most of the bloc's policy makers agree that a unified banking system is needed, the details of how to close down struggling banks and who will have final say over the resolution mechanism have been a point of contention.If the proposal is agreed upon, German Chancellor Angela Merkel could face some resistance as Germany has been unwilling to share the cost of failing financial institutions. The euro may be under pressure later in the week as the US Federal Reserve meeting gets under way. The highly anticipated policy meeting will likely give markets a better idea of the bank's taper timeline. With positive labor data and a new bipartisan budget deal both supporting the case for a sooner rather than later taper, some have begun to speculate that the bank will start to cut back on its $85 billion per month bond buying plan as early as December.