On Monday 9 April, the vice-president of the European Central Bank (ECB), Vítor Constâncio, called on Europeans to act decisively to tackle the existential shortcomings of Economic and Monetary Union (EMU).
One of the priorities, he stressed, is to complete Banking Union in the Eurozone, by setting in place a European deposit insurance system (EDIS). The European legislator may have some progress to report on this dossier, as the financial risks of already been reduced substantially, said the ECB vice-president, who was appearing before the MEPs for the last time.
Constâncio listed the progress made on reducing financial risks: - banks' prudential ratios have reached satisfactory levels; - the rules on assets to be mobilised in the event of bank resolution (MREL) are in application; - a bail-in, as provided for by European law, must take place before any intervention from the European Stability Mechanism (ESM); - private and leveraged indebtedness have fallen.
“This should, in our view, unlock the negotiations on a European deposit insurance scheme”, he said. He added that there was a possibility, in the framework of these negotiations, of reducing banking risks still further on a qualitative level in three areas: - by harmonising insolvency frameworks; - by conducting regular reviews of progress towards reducing non-performing loans; - by suppressing “unwarranted” national options and discretions in banking credentials legislation.
In mid-March, the European Commission presented a raft of measures aimed at reducing the existing stock of non-performing loans (NPL) and preventing them from building up in the future in the European banking sector (see EUROPE 11981).
The Eurozone countries will be called upon to take decisions to deepen the EMU at the June European summit. A Franco-German roadmap is being prepared to this end. (Original version in French by Mathieu Bion)