The concept of a unified banking market in Europe still lacks a common deposit insurance.
(Photo: Bloomberg)
Frankfurt Deutsche Bank boss Christian Sewing calls for more speed in the creation of uniform capital markets in Europe. “Progress is too slow and time is of the essence,” said Sewing on Tuesday evening at an event of the CDU Economic Council. In order to shape the economic change, a lot of capital is required. “The necessary investments are enormous.” The state alone will not be able to cope anywhere. “Even we banks cannot do it alone.”
Sewing pointed to the spending needed to reduce the economy’s carbon emissions to net-zero by 2050. McKinsey’s economic advisors estimated that the investments required to achieve this would amount to an average of one trillion euros per year by 2050.
“We can probably handle half or even a little more of this by reallocating investments from other industries.” That would still leave a financing requirement of 200, 300 or 400 billion euros. Private capital is therefore urgently needed. “If we don’t manage to get the Capital Markets Union off the ground in Europe, the Green Deal will not exist,” he warned.
Federal Finance Minister Christian Lindner (FDP) replied that he shared the assessment of the importance of the capital market union. He also agrees with Sewing when promoting a banking union, said Lindner. “This is a contribution to improving the overall competitiveness of the banking and financial center of Europe.”
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He is for the capital market and also for the banking union. “But not at the price of sacrificing the stability of our savings banks and cooperative banks with their own institutional protection systems,” he noted. “There can be no communitization of national debt via the balance sheets of private institutions,” he said. Because then there would not be more but less stability in Europe.
The concept of a unified banking market in Europe still lacks a common deposit insurance. In particular, dealing with the security systems of savings banks and Volksbanks and Raiffeisenbanks, which play an important role in Germany, is considered controversial.
Struggles for deposit insurance
A common reinsurance for deposits and the reduction of risks from government bonds in the bank balance sheets were considered to be possible cornerstones for progress. At the beginning of May, after a special meeting of EU finance ministers, it was said that the euro countries wanted to agree on a schedule for completing the banking union in June.
More: Regulators are relaxing capital rules for major European banks