Meeting in an inclusive format on Thursday 17 June in Luxembourg, the Eurogroup did not adopt an exhaustive and detailed work programme aimed at completing the Banking Union in the euro area, with, notably, the creation of a European Deposit Insurance Scheme (EDIS).
This is due to the lack of financial urgency, which had put enough pressure on the European legislator after 2012 to set up the ‘supervision’ and ‘resolution’ parts of the Banking Union. It is also due to the political calendar, which limits the decision-making capacity of some ministers as German parliamentary elections take place in September.
“We made progress, we need to make more progress. It will take a bit more time”, said Eurogroup President Paschal Donohoe after the ministerial meeting. He called for a “credible, ambitious and effective” agreement that would build a banking union that is good for jobs and investment. He expressed confidence that the Eurogroup would succeed, with all Member States recommitting themselves on Thursday to finding an agreement ”in the coming months”. “We will come back to this issue later in the year”, he promised.
German Finance Minister Helmut Scholz confirmed the need for the Eurogroup to give itself more time. “I’m sure we won’t be ready to reach an agreement today nor this week”, he said on his arrival in Luxembourg. According to him, “not just one issue, but the whole scenario”, should be addressed .
He referred to his specific proposal of November 2019, in which he advocated for the establishment of EDIS with an element of financial risk sharing, once risk reduction measures (reduction of non-performing loans, introduction of a risk related to bank exposures to sovereign debt) have been put in place (see EUROPE 12366/6).
In particular, Germany is of the opinion that the Portuguese EU Council Presidency’s progress report on the Banking Union focuses too much on EDIS and not enough on financial risk reduction.
On the French side, Minister Bruno Le Maire advocated moving forward step by step on this issue. “There are many, many obstacles on the road to the Banking Union. I think the wise thing to do is to lift them one by one. A global agreement seems to us, within a reasonable time, out of reach“, he said, without however specifying a planned course.
See the Portuguese progress report on the Banking Union: https://bit.ly/3g2yWyz (Original version in French by Mathieu Bion)