Eurozone: Sharing more banking risks

LUXEMBOURG: Eurozone Finance Minister Jeroen Dijsselbloem asked the European Union to share more banking risks, indicating support for a plan to set up EU-wide guarantee for bank deposits. Germany opposes the idea, fearing its accumulated funds could be used to guarantee the deposits of savers in other European countries. The common deposit guarantee would represent the third pillar of a European banking union, designed to strengthen the financial sector in response to the sovereign debt crisis. The 19 countries sharing the euro have already agreed on a single bank supervisor and a Single Resolution Mechanism (SRM) for winding up failed banks, with the costs to be covered from a dedicated fund, filled by the banks themselves. A German government document, however, said that before such a scheme could be introduced, the two existing elements of the banking union should be fully implemented and tested.

Published in The Express Tribune, September 13^th, 2015.

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