Overcoming the financial crisis in Europe has considerably slowed down the work to complete Banking Union in the Eurozone by creating a European deposit insurance system (EDIS). Due to a lack of pressure on the political leaders, it is unlikely that this work can be completed before the European elections.
Senior political figures, members of the European Parliament and ministers unlike, lack the courage to explain to the citizens that certain problems cannot be effectively resolved at member state level, Olivier Guersent, Director General for Financial Services at the European Commission, told the annual conference of the Single Resolution Board (SRB) on Monday 15 October.
He considers that “only a crisis big enough to scare them and not big enough to kill us” would breathe new life into the legislative process. “The problem with crises, they are difficult to calibrate”, he said ironically.
MEP Danuta Hübner (EPP, Poland) regretted the fact that the ideas put forward by the Commission in October 2017 to stimulate the creation of the EDIS system (see EUROPE 11881) had resonated so little with the European legislator.
There are several reasons for the slow pace of work at the European Parliament: - the fact that the priority has been given to reducing financial risks such as non-performing loans (NPL) before any decision on risk-sharing can be made; - the perception that deposits are first and foremost guaranteed by public money.
I am “not optimistic to see the end of the debate at the EP before the EU elections”, the MEP regretted.
“Everybody must keep their own house in order”, Guersent replied, criticising the Parliament and the member states for having failed to reach an agreement on the first phase of EDIS, “which does not even provide for risks to be pooled”.
The former head of cabinet of the former Financial Services Commissioner, Michel Barnier, also stressed that an agreement had been reached in December 2013 on the creation - by no later than 2024 and unconditionally - of a backstop for the Single Resolution Fund, the financial arm of the 'resolution' plank of Banking Union.
“Those trying to pileup conditions before starting work should think better of it”, he warned. (Original version in French by Mathieu Bion)