Reuters — Euro zone leaders will ask their finance ministers on Friday to quickly complete their banking union, but at the insistence of Germany they will not say directly what that could mean for the setting up of a European Deposit Insurance Scheme (EDIS).
Draft conclusions of the EU summit under way in Brussels showed that a reference in an earlier version to a “gradual introduction of a European Deposit Insurance Scheme” has been removed.
Instead, there is a more vague reference to finishing work on the banking union.
“Work should rapidly advance as regards… the Banking Union, to enhance financial stability in the euro area,” said the latest version of the conclusions, to be adopted by EU leaders later on Friday.
The European Union’s banking union is a project open to all 28 EU countries, but only the 19 countries sharing the euro have signed up for it.
It means that all major euro zone banks have the same supervisor – the European Central Bank – and the same rules on what happens if they go bust. There is also a single fund to cover the cost of such a resolution.
The only missing part of the banking union is a pan-European deposit insurance scheme, which would reassure savers that deposits of up to 100,000 euros are safe no matter where in the bloc they are held.
But Germany, the EU’s biggest economy, does not want its depositors to be liable for pay-outs in the event of bank failures elsewhere. It insists the EU must first take steps to minimize risks before starting talks on shared responsibility.
Berlin insisted that any reference to setting up such a deposit scheme be removed at the EU summit in October, and has succeeded in doing so again at the December meeting.
“Germany is opposed but others were very adamantly for it, Italy and France notably,” said an EU official who declined to be named.
“(At the summit, German Chancellor Angela) Merkel made the argument that she hadn’t realized that EDIS should be part of banking union. Everyone else kind of made the point that was obvious.”
As a concession to other euro zone countries, which want to move ahead with EDIS, the conclusions say that the leaders ask finance ministers “to swiftly examine the proposals put forward by the Commission”.
EDIS, however, is only one of the proposals submitted by the Commission. Others include setting up an advisory Fiscal Board that would help establish the best fiscal stance for the euro zone as a whole, and creating national competitiveness boards that would help improve the economic competitiveness of a country.
There are also further Commission proposals on streamlining highly complex EU budget rules.
All these actions were proposed by the European Commission in October as part of a roadmap for closer integration of the single currency area – the Economic and Monetary Union – in order to minimize the chances of economic crises in the future.
