European Deposit Guarantee Scheme is crucial for Banking Union

Brian Hayes MEP has welcomed the European Commission’s proposal for a new Euro-area Deposit Guarantee Scheme, as the crucial third pillar for a fully-fledged Banking Union.

“A European Deposit Insurance Scheme is the crucial third pillar in the completion of the EU's Banking Union. It would follow the successful development of a single bank supervisor and a single bank resolution mechanism," the Dublin MEP said in Brussels.

“All EU Member States need to get on board with this proposal. It will make our banks safer and will give deposit holders peace of mind.

“The absence of a common deposit insurance scheme could leave depositors open to vulnerabilities in the banking system. A strong connected European banking model is something we should strive for; we need to have the right safeguards in place to ensure that we don't repeat the mistakes of the financial crisis.

“The introduction of a new supervisor, the Single Supervisory Mechanism (SSM), has been key to establishing order and confidence in Europe’s banks. Providing proper EU financial scrutiny and control for the engines of future growth, the banks, is crucial to sustain growth.

“Stress tests conducted by the European Central Bank have clearly identified banks that have a problem and have worked with the banks to develop restructuring plans to address capital shortfall. Permanent TSB, in Ireland, was one of those banks and has since done extremely well to plug the capital hole.

“It is unfortunate that Germany has been clearly opposed to a Euro-wide Deposit Guarantee Scheme. This scheme is important for both big and small Member States. Risk-sharing is a key principle of the banking union and German banks face risks in the same way that other European banks face risks.

"We need to look at this proposal in the sense of boosting savers’ confidence in our banks," added MEP Hayes, a member of the European Parliament's Economic and Monetary Affairs Committee.