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Report: Eurozone unable to strike breakthrough on deposit guarantee plan

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Report: Eurozone unable to strike breakthrough on deposit guarantee plan

Eurozone finance ministers were unable to strike a breakthrough on the establishment of the European Deposit Insurance Scheme, a key element for the formation of a European banking union, during a March 12 meeting, Reuters reported the same day.

Several countries, such as Germany, Ireland and the Netherlands, believe that banks in the eurozone must first reduce their exposure to risks before work on such a deposit guarantee scheme can begin. However, European Central Bank President Mario Draghi had reportedly told the ministers that banks have already made significant progress in risk reduction to allow negotiations on the EDIS to push through.

Peter Altmaier, who served as finance minister for Germany on an interim basis, said before the meeting that talks about an EU-wide deposit insurance scheme could only progress if the risk of a new banking crisis is reduced in countries where there is a high level of soured debt and remaining unsolved issues.

First proposed in November 2015, the EDIS is the so-called third pillar of the eurozone banking union, alongside ECB oversight of the bloc's biggest lenders and a single mechanism for resolving failing banks. As conceived, the EDIS would be implemented over three phases through 2024 and eventually replace the national schemes that provide the €100,000 of deposit protection guaranteed to bank customers across the EU.