To achieve a fully-fledged Economic and Monetary Union (EMU), the E.U. must complete the Banking Union (BU) based on a harmonised, risk-sharing banking services sector. The last step remaining is the establishment of a European Deposit Insurance Scheme (EDIS, see here). A complete overhaul of the field is hard to obtain since a system resilient to internal and external economic shocks necessarily implies risk-sharing and loss-pooling between credit institutions within the Single Market, which ultimately entails solidarity between Member States’ economies. Further factors and steps need to be considered to achieve a crisis-resilient Europe through the establishment of the third pillar, the EDIS.
Germany, the largest lender in the E.U. and with the strongest economy, has been opposing insurance integration stating, in particular, lax banking supervision and enforcement in the Eurozone (article here). One particular example is the French banking oligopoly described by Gobry (see here), which opposes the Commission’s plan to improve economic growth and creation of jobs in the E.U. by credit rationing SMEs [1]. This, in Altmaier’s words, needs to be addressed by clarifying ‘what we mean by risk reduction and what steps are needed for this’ (see here). Second, Mario Centeno proposes a:
- fiscal capacity (see the EP Research Report), competence through which the Eurozone will collect and use an own budget, different to the EU budget; and
- strengthened Euro-governance to absorb shocks in the economy.
Read here:
- BETTER FINANCE CMU Briefing Paper;
- BETTER FINANCE Mis-Selling Report;
- BETTER FINANCE ‘Stronger Together: The Case for a Fully-Fledged EDIS’;
- Euractiv article ‘Germany demands clarity on risk reduction for Banking Union’;
- Bloomberg article ‘France Doesn’t Need Bank Consolidation’;
- FT article ‘Germany stands firm against EU bank deposit guarantee scheme’;
- European Parliament Research Centre ‘A fiscal capacity for the Euro Area?’.
[1] See European Commission Action Plan on Building a Capital Markets Union, COM(2015) 468 final; see also Christoph Kupman, ‘Market-based financing in the Capital Markets Union: The European Commission’s Proposals to Foster Financial Innovation in the EU' (2017) 14(2) European Company and Financial Law Review 336, 337.