This content was published on May 16, 2023 – 08:52
Brussels, May 16 (EFE).- The German Finance Minister, Christian Lindner, said on Tuesday that Berlin is open to making progress towards a European deposit guarantee system, but conditioned it on reducing bank exposure to sovereign debt, which is very high in some European countries.
Lindner made this statement upon arrival at the meeting of the European Union (EU) Economy and Finance Ministers when asked about the statements made by the Spanish Vice President Nadia Calviño, who yesterday defended the need to have this common deposit insurance and highlighted the solidity of the Spanish bank.
“Germany is open to taking further steps in the deposit guarantee area if, on the other hand, the link between public finances and private banks is overcome,” said Lindner, who this afternoon will meet with the Spanish minister for Economic Affairs and Digital Transformation for the Spanish Presidency of the EU in the second half of this year.
Lindner was “open to proposals”, also from Spain, but stressed that progress in reducing bank exposure to sovereign debt is a “prerequisite” for his country before being able to take new steps towards a common deposit insurance (EDIS).
The German minister argued that in some parts of the European banking system there are entities with a large amount of government debt on their balance sheets that is considered “fictitiously risk-free” and, until the problem has been resolved, progress towards EDIS cannot be made.
“At this point, I can’t imagine seeing progress on the regulatory treatment of sovereign debt exposure, so I doubt we’ll see any progress in the EDIS area anytime soon”; she added.
Germany, the country traditionally most reluctant to this common fund, which would intervene to jointly and equally guarantee deposits of less than 100,000 euros throughout the banking union in the event of a crisis, is not satisfied for the moment with the recent proposal for the European Commission (EC) to improve the management of banking crises in Europe (CMDI).
“We are absolutely convinced that we need progress in the banking union (…) but the current proposal of the European Commission cannot be approved yet,” said the head of Finance.
Specifically, Berlin considers that the norm deviates from the rule that before common European instruments can intervene in the event of a banking crisis, an internal bailout of 8% must be applied -paid by shareholders and creditors-, something that it sees “questionable from regulatory, economic and ethical point of view”.
He also argued that Germany has its own deposit guarantee systems for its savings banks and that these would not be protected by the Community Executive’s proposal, despite the fact that they work, for which reason the initiative “still has to be improved.”
The ministers will debate this Tuesday for the first time in a formal way the proposal, which was put on the table in order to make progress in the banking union after verifying the Eurogroup last year that the differences between the countries made it impossible to launch the fund deposit guarantee. EFE
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2023-05-16 09:05:03
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