Local and regional leaders acknowledge the proposal for a European Deposit Insurance Scheme (EDIS) in an opinion adopted during the October plenary session of the European Committee of the Regions (CoR), but demand first a full establishment of national deposit schemes with a comprehensive consideration for the role of public banks, measures for the minimisation of risks, as well as an assessment of the impacts of the proposals on existing and functioning institutional protection schemes.
The financial crisis revealed the weaknesses of the European finance sector, leading to increased public mistrust of the banking sector. The European Deposit Insurance Scheme (EDIS) aims at winning back the public confidence by providing a stronger and more uniform safety of retail bank deposits across the Banking Union.
Before the EDIS can be established certain conditions must be met, argues Hans-Jörg Duppré, President of the County Südwestpfalz: "First and foremost we need to implement risk reducing measures before the risks of failure can be shared between the financial institutes and Member States. Member States also have to stay obliged to fully establish and maintain national guarantee schemes, which need to meet the harmonised requirements of sufficient funding and usage. Setting up a European Deposit scheme before the full implementation of the existing legislation bears the great risk to make stable and efficient funds liable for unstable systems without having the influence on how to manage the risks."
The local and regional leaders want to make sure that financial institutions that operate conservatively are not disadvantaged. This applies especially to public municipal, regional and promotional banks that are primarily not profit-driven, that play a major role in building and maintaining basic infrastructure and financing SMEs, micro-enterprises and start-ups.
"Although regional and promotional banks are refinanced on the capital market, their operations present a very low risk of insolvency due to the close link to the public authorities and conservative long term investment strategies. Such public banks provide a crucial boost to start-ups and the local economy, especially in the rural areas, where investment doesn't always guarantee high profit margins", rapporteur Duppré stated.
The Members also note that institutional protection schemes provide a useful complement to simple deposit guarantees as such schemes protect not only people's assets but also the institution as a whole and ask for clarification if the funds can also be used for preventive or alternative measures. Finally, the local and regional politicians criticise the missing public consultation and impact assessment on the present EDIS proposal that would make a significant contribution to improving the legislative transparency.