BERLIN, Oct. 17 (Xinhua) -- The German government reiterated its position that effectiveness should come before haste on plans for a new pan-European banking watchdog, adding that it is not ready for a decision at the two-day summit of European leaders beginning on Thursday.
"Quality is more important than speed but that doesn't mean that we don't want to work quickly," Merkel said during her meeting with Swedish Prime Minister Fredrik Reinfeldt on Tuesday, adding that banking supervision would be discussed at the summit.
But the Chancellor also stressed that Germany was committed to a new European system of banking sector supervision, saying that "we must ensure that at the end of the day the new banking supervision system is better than the one we now have."
EU leaders decided in June to allow the European Stability Mechanism (ESM), EU's permanent bailout fund, to recapitalize struggling banks directly instead of passing the loans through governments, on condition of establishing a common banking supervisor under the leadership of the European Central Bank (ECB) by the beginning of 2013.
Germany champions the idea of setting up an independent, Europe-wide banking supervision system, but is at odds with some key partners on the details of the banking supervision. Paris wants the ECB to supervise all 6,000 eurozone banks, while Berlin favors the supervision of only big banks that have an impact across the eurozone.
Berlin is also wary of overburdening the ECB if it takes over the new role of bank supervision in Europe too soon.
"We have a big interest in it, but we also say that such banking supervision must be able to work in a credible, independent and effective way," German government spokesman Steffen Seibert told a news conference on Monday.
"The preliminary work is intensively underway," he said, adding that it was not yet ready for decision at the upcoming European summit.
The two-day summit is also expected to concentrate on the possibility of a bailout for Spain and the situation in Greece.
In his meeting with Merkel, Reinfeldt agreed with Merkel in that a cautious approach is needed, saying that proposals laid out by the European Commission were flawed.
"We don't think the suggestion on the table now is ready," he said. "And it's better to get it right than rush it through."
A Europe-wide system of banking supervision is a significant step towards a banking union, aiming at checking the ravaging debt crisis and fixing flaws of the common currency union together with other measures for deeper economic and political integration.
France and Spain had called for details for the banking union to be agreed by the end of the year. However, Germany and Britain agreed that talks at the EU summit about banking supervision needed to take into account the bloc's single market obligations.
Merkel and British Prime Minister David Cameron talked on Monday over phone on the provisions on banking union and agreed that further work is needed before agreement can be reached, according to a statement released by Cameron's office.