The Finance Minister supports the establishment of a new EU payment system, but does not want to allocate any funding for it. “The innovation must come from the private sector, must be designed and financed there.”
(Photo: AP)
Frankfurt The German banks will have to get by without state subsidies in the planned development of a European payment system (EPI). “We support EPI politically to the best of our ability, also in contact with other actors in Europe,” said Florian Toncar, Parliamentary State Secretary in the Ministry of Finance, the Handelsblatt. “But we don’t spend any tax money on it. The project has to be privately funded.”
Finance Minister Christian Lindner made a similar statement on Tuesday evening. He hopes for progress at EPI, he said at Deutsche Bank’s New Year’s reception. “But the innovation must come from the private sector, where it must be designed and financed.”
This is a disappointment for many banks. For a long time they had hoped that they would be able to receive European funding from the federal government to set up EPI. The institutes argued that EPI is important for strengthening the European financial market and therefore deserves to be promoted like other infrastructure projects.
EPI was founded in 2020 by several major banks. The aim is to set up its own payment system in order to become more independent of powerful US corporations such as Mastercard, Visa and PayPal. By 2026, those involved are calculating investments of around 1.5 billion euros.
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31 banks and two payment service providers are involved in the EPI interim company. However, many of the institutes have since turned their backs on it. The decision as to whether the project will be implemented and who will provide the necessary funds has been postponed several times.
Savings banks are relaxed about delays
In Germany, Deutsche Bank and the savings banks still stand by EPI. Commerzbank and DZ Bank, on the other hand, have canceled. However, the savings banks and many other parties involved are trying hard behind the scenes to persuade DZ Bank to participate. A final decision is now being targeted by mid-March. However, some of those involved expect the decisive decisions to be taken by February 25th.
From the point of view of the German Savings Banks and Giro Association (DSGV), the fact that the decision about EPI is dragging on is not a problem. “Against the background that a European solution in payment transactions could not be achieved in the past 20 years, further time to find the right setup for successful implementation is well invested,” explained the association. “Since the starting position within the countries is very different, many aspects have to be taken into account.”
Financial institutions from France, Belgium and the major Spanish bank Santander, among others, want to take part in EPI. Other institutes from Spain and other member states have waved their hand. If at all, then EPI should initially only be launched as a slimmed-down version.
The profitability of the banking sector is important to Lindner
Finance Minister Lindner wants to work independently of EPI to ensure “that the German institutes in Europe and the world can play at the top level”. In order for German banks to become more profitable, fair framework conditions are needed in relation to competing financial centres.
“In the past, the goals of financial stability and consumer protection were at the forefront,” said the FDP leader. Both are also important to him. “But it is also clear to me that competitiveness must be a priority for the regulator, the state.” He will therefore advocate uniform rules in Europe.
However, Lindner does not expect a rapid breakthrough in the negotiations on the further development of the EU banking union. “It won’t happen in one go, we need intermediate steps.” This involves, for example, crisis management when institutes get into trouble. In addition, Lindner calls for banks in Europe to be able to use capital and liquidity more flexibly across national borders.
On the other hand, Lindner is critical of the introduction of a uniform EU deposit insurance scheme, which the ECB and other member states believe is essential for the completion of the banking union.
“Personally, I am of the opinion that it is not recommended in terms of regulatory policy to create a common deposit insurance scheme in Europe,” said the finance minister. “A strong national component” is always needed, since each member state is responsible for its own private banking sector. “Just as we don’t want sovereign debt mutualisation, we can’t want full private sector risk mutualisation.”
In the coalition agreement, the FDP, Greens and SPD declared that they were prepared to negotiate EU deposit insurance as part of an overall package – albeit only in a scaled-down version. Instead of joint liability for failures, the new federal government has in mind a reinsurance system in which national security systems support each other in emergency situations.
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