Brussels, 04/11/2015 (Agence Europe) - On Wednesday 4 November, the European Commission confirmed that by the end of 2015, it is to present a legislative proposal to set in place the 'deposit guarantee' plank of banking union in the eurozone.
Initially, this proposal will be based on a “reinsurance approach” and will “build on member states' existing schemes. It will supplement national deposit guarantee schemes and provide funding when national schemes are unable to handle large local shocks” caused by the failure of banking groups, said the Commissioner for Financial Services, Jonathan Hill, at a forum in Frankfurt to mark the first anniversary of the single supervisory mechanism, through which the ECB has directly supervised 123 banking groups of the eurozone since November 2014 (see EUROPE 11423).
The President of the ECB, Mario Draghi, also argues in favour of the completion of the first plank of banking union. “Deposits, which are the most widespread form of money, have to inspire the same level of confidence wherever they are located. To ensure that deposits are truly as safe everywhere across the euro area, the likelihood that a bank fails has to be independent of the jurisdiction where it is established. Resolution has to follow the same process in the event that a bank fails. And (…) depositors must be afforded similar protection wherever they are located”, he said.
A new legal battle is threatening over this controversial issue, as Germany opposes any increased pooling of banking risks. This Thursday, the Bundestag is set to adopt a resolution rejecting any European legislative initiative on deposit guarantees. (Original version in French by Mathieu Bion)