Efforts to clinch a deal on the way banks, insurers and markets in the European Union are supervised have failed and talks will resume in late August or early September.
The talks on creating pan-European authorities to prevent any repetition of the financial crisis are deadlocked because of differences between EU governments and the European Parliament over how much power the new supervisors will have.
'We are getting closer to the finish line but there is still some way to go. A dynamic and balanced deal is now in reach,' EU Internal Market Commissioner Michel Barnier said.
A European Parliament source said: 'Talks have not led to an agreement this morning. Negotiations have now been postponed until the end of August, early September.'
Despite the delay, the parliament could still vote on the supervision package in September and the new institutions could still become operational next year as planned.
Some European diplomats had hoped a deal would be reached this week after EU finance ministers agreed yesterday to offer concessions to the parliament, which is pushing for a more centralised approach to supervising the financial sector.
But although differences were narrowed at talks on Wednesday, the parliament's negotiators decided the offer was not sufficient.
'The feeling is that the Council (EU governments) still should move one or two steps in the direction of the parliament,' said an official from the executive European Commission, which is trying to broker a compromise.
