EU leaders back off banking union pledge as Juncker presses on
European Commission President Jean-Claude Juncker will press ahead with plans to improve the euro area’s banking union even after leaders backed off from endorsing stronger financial-system ties, a European Union official said.
EU leaders dropped references to completing banking union in the conclusions of Thursday’s summit in Brussels. “The European Council reiterates that the process of completing the Economic and Monetary Union must be taken forward in full respect of the single market and in an open and transparent manner,” they said.
An October 9 draft of the summit conclusions called for work to be “intensified” on shoring up the common currency, “stressing the urgency of completing the banking union.”
The leaders’ change in emphasis won’t get in the way of Juncker’s strategy, the official said. The commission has said it will introduce plans to move toward common deposit insurance before the end of the year, as part of a broader strategy to strengthen the 19-nation euro zone.
Reinforcing the common currency has become a European priority after years of financial crisis forced five euro members to seek bailouts and threatened to drive Greece out altogether. At the same time, countries have been reluctant to reopen debate over the European Union’s founding treaties.
Wait Urged
Juncker proposed moving toward joint deposit insurance, starting with a plan for nations to provide reinsurance to each other’s national systems, in a July report that was endorsed by EU President Donald Tusk alongside Mario Draghi of the European Central Bank, Jeroen Dijsselbloem from the Eurogroup and Martin Schulz of the European Parliament.
A European deposit-guarantee system will have to wait until financial-stability measures already on the books, such as common bank-resolution rules, are fully implemented, German Finance Minister Wolfgang Schaeuble said last month in Luxembourg. He said starting a debate on such a system now would “put the cart before the horse.”
[Bloomberg]
