Banking Union
Deposit guarantee scheme should focus on reinsurance
“These proposals are a belated but welcome step towards a proper European scheme for guaranteeing deposits held by ordinary citizens. The financial crisis revealed the inherent risk for depositors with the current system of national schemes and underlined the need for a stronger European system to prevent bank runs and the impact they can have for the wider financial system.
"It is regrettable that it has taken the Commission three years from the proposal on Banking Union to come forward with proposals on a European deposit guarantee scheme, which is supposedly one of three pillars of the union. But, it is now important to work to turn these proposals into a functioning system. This system has to reassure depositors that there is an EU backstop that effectively removes dependence on their own sovereign, and thereby their confidence in their government.”
Green financial and economic policy spokesperson Sven Giegold added:
"The European deposit guarantee scheme has to be binding for all institutions but should not endanger existing solid institutional protection schemes of small banks. This implies creating a 'reinsurance scheme' with risk-adjusted contributions. The reinsurance scheme outlined by the Commission could work but not if the premiums paid include sovereign risk. Furthermore, the Commission has to ensure that member states implement the already agreed common rules on bank resolution. To complete the Banking Union, we need effective European macro-economic supervision. Centre-right MEPs in the European Parliament are blocking a real banking structure reform that would solve the too-big-to-fail problem. Finally, the linkage between states and banks has to be cut.”
