Brussels, 28/07/2015 (Agence Europe) - The eurozone countries should complete banking union by creating a pan-European deposit guarantee scheme, the IMF states in its 2015 report on the eurozone, which was published on Monday 27 July.
The executive committee of the international organisation stressed the “need for common deposit insurance with an effective fiscal backstop”, as a third plank of banking union in the eurozone, in addition to the 'supervision' and 'resolution' planks.
In early July, the Ecofin Council approved the approach of the report of the 'five presidents' (European Commission, European Council, ECB, Eurogroup and European Parliament) on the development of Economic and Monetary Union, which called for a first phase (2015-2017) during which legislative actions can be carried out without any need for treaty change, such as the completion of banking union (see EUROPE 11359).
The IMF also argues in favour of making access to the direct recapitalisation instrument for failing banks from the European Stability Mechanism, the permanent bailout fund of the eurozone (see EUROPE 11214). This recommendation, which is also included in the report of the 'five presidents' (see EUROPE 11340), remains a matter for the sole discretion of the finance ministers of the eurozone with seats on the governing board of the ESM, a fund which is inter-governmental in nature.
Still in the field of banking, the international organisation urges Europeans to “act more exhaustively to reduce the high level of non-performing loans”.
On the economic situation, the IMF forecasts that eurozone growth will stand at 1.5% of GDP in 2015 and 1.7% of GDP in 2016. In its spring economic forecasts, the Commission predicts identical growth this year and a bit higher (1.9%) next, assuming an unchanged trajectory. “Several factors cloud the outlook for growth over the next five years; these include high unemployment, especially among the youth, large corporate debt and rising non-performance loans in the banking sector”, Mahmood Pradhan, mission chief for the euro area, states in a press release. (Mathieu Bion)