Brussels, 16/02/2016 (Agence Europe) - The 'economic and monetary affairs' committee (ECON) of the European Parliament takes the view that the existing banking legislation will allow the eurozone countries involved in banking union to achieve a “substantial” reduction of the risks in the banking system.
The creation of the European Deposit Insurance System (EDIS) requires the implementation of the single rulebook as well as the transposition at national level of the 'Bank Recovery and Resolution Directive' and the 'Deposit Guarantee' directive, in order to “achieve a substantial reduction of risks in the European banking system”, the MEPs argue in a report on banking union steered by Roberto Gualtieri (S&D, Italy). They take the view that applying the provision on the bail-in tool will even bring in “a systemic mechanism of risk avoidance”, thus reducing the fears of moral hazard which could be induced by the progressive neutralisation of guarantee schemes.
The ECON committee, which is ready to initiate the legislative proposal linked to the EDIS under the lead of Elisa Ferreira (S&D, Portugal), stresses the need to guarantee “a uniform and high level” of protection to deposits, irrespective of their location within the eurozone. In addition to the 'supervision' and 'resolution' plans already in place, it believes that the 'deposit guarantee' plank of banking union will also help to break the vicious circle between bank crises and sovereign debt crisis (see EUROPE 11448).
The EP has always been a proponent of the need to ensure that the Single Resolution Fund (SRF), the financial arm of the 'resolution' plank of banking union, is partly based on an inter-governmental agreement (see EUROPE 11473). For this reason, it calls upon the Commission to make a proposal to “rapidly” include the SRF fund in the Community scope, as recommended by the report of the 'five presidents' on reinforcing economic and monetary union. At the Ecofin Council of Friday 12 February, the Dutch finance minister, Jeroen Dijsselbloem, announced that the SRF fund so far has an envelope of €4 billion.
NPL. On the question of non-performing loans, which limit banks' ability to finance the real economy, the MEPs believe that it is critical for financial institutions to have the capacity to write off or sell on these non-performing loans. They welcome the creation of specific non-performing loan management structures in countries in which stocks of NPLs are high. (Original version in French by Mathieu Bion)