The eurozone should introduce a single scheme to protect savers across the euro zone, the president of the European Central Bank said on Wednesday, adding that failure to make such a reform undermined the currency union. While not the first time Mario Draghi has called for such a move, his warning applies pressure on Germany and others to end a years-long deadlock on the issue. Berlin does not want its banks to be liable for losses elsewhere.
Speaking to an audience in Frankfurt, Draghi signalled that failure to introduce such a safety net risked repeating mistakes in the "institutional design" when the euro currency was established. Although 19 countries use the euro, they manage their economies individually. It has fallen to the ECB to print money in order to prop up the region, after a financial crash and debt crisis almost forced Greece out of the bloc.
"Deposits, which are the most widespread form of money, have to inspire the same level of confidence wherever they are located," Draghi said. "When push comes to shove, depositors must be afforded similar protection wherever they are located." Jonathan Hill, the European Union commissioner in charge of regulation, said he would make a fresh attempt this year to reach agreement on a new deposit protection scheme based on a 'reinsurance approach'.
"This is what you might call unfinished business," he said. The remarks come just days after a further test of Greece's banks showed that almost every second loan in the country was in danger of not being repaid. New rules at the start of next year would make it possible to force losses on savers with more than 100,000 euros ($109,000) should a bank in Greece or elsewhere run into trouble.
Comments
Comments are closed.