Another year without an EU deposit guarantee scheme

Heads of state and government do not mention it in their last meeting of the year

A common European scheme to guarantee customers' deposits in banks in the event of bankruptcy is already the great unfinished business of the European banking union. This 2020 will end without the heads of state and government of the countries that operate with the euro having even discussed it. The economic response to the pandemic has monopolised the agenda, but even if it hadn't, the proposal would have stayed as it is - merely a proposal -, as it survives since 2015 in the face of strong opposition from countries like Germany or the Netherlands.

This Friday the heads of state and government of the euro countries met briefly at the usual end-of-year summit to ratify the approval of the reform of the rescue fund (the European Stability Mechanism, EMD) and its safety net to strengthen it and have more capacity for fiscal supervision in case a country needs it.

However, the deposit guarantee scheme, a historic request from Spain, has not been launched. One of its main detractors was Germany, which was precisely in charge of the rotating presidency of the EU this last half of the year, and hence little emphasis has been placed on the issue. Last year Germany's finance minister, Olaf Scholz (a socialist), was open to the idea, but that was all.

In fact, this week the president of the ECB's supervisory board, Andrea Enria, admitted that the implementation of the EDIS (the Deposit Guarantee Scheme) will take time to become a reality despite reminding that it is necessary for "the banking union to be a truly internal market".

The idea that has been on the table since 2015 is a Euro scheme that could rescue up to 100,000 euros from all customers of any European bank that goes bankrupt. Current community regulations already foresee that, in the event of bankruptcy, clients would not be left without their savings, but those in charge of guaranteeing that the savings are collected are the funds of each country. The point was to create a single European scheme in order to share the risks.

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