Germany rejects joint liability for savings deposits.
(Photo: dpa)
The dispute over the introduction of a European deposit insurance (Edis) has now been going on for seven years – but a compromise is still not in sight. At their meeting on Thursday, the finance ministers of the euro countries should therefore finally say goodbye to the project – and instead concentrate on other financial market reforms where there is a chance of an agreement in the near future.
The EU Commission also has to admit that there is simply no consensus on Edis in Europe. Germany rejects joint liability for savings deposits. Under certain conditions, the federal government is only willing to provide a light version, in which national security systems help each other out with loans in emergency situations.
Before doing so, however, Germany is insisting on reducing risk in the banking sector – and is thus encountering resistance from many southern European countries. The government in Rome firmly rejects demands that domestic institutes reduce the proportion of Italian government bonds in their balance sheets.
These fundamentally opposed positions cannot be reconciled. Instead of continuing to argue about Edis, member states should push less controversial issues like the European Capital Markets Union. This is more important for European integration anyway.
Top jobs of the day
Find the best jobs now and
be notified by email.
Financing the energy transition requires better framework conditions for private investments. Currently, however, there is a proliferation of different rules within the EU, for example in consumer protection or in the case of company insolvencies. This fragmented market is one of the main reasons why Europe lags behind the US in many areas.
Pragmatic solutions are required
A European deposit insurance scheme would not solve most of these problems, nor would it automatically lead to more cross-border bank mergers. Former Unicredit boss Jean Pierre Mustier has repeatedly stressed that he doesn’t need Edis to run a pan-European bank.
It would be more important to harmonize national rules and simplify the cross-border transfer of liquidity and capital. However, this will only succeed if small states in particular can be sure that in the event of a crisis they will not be left with the losses that subsidiaries of large foreign banks have accumulated with them.
It is precisely for such cases that politicians must now find pragmatic solutions. This is tedious, but more promising than Edis.
More: European deposit insurance fails because of German resistance