The global economic crisis has led to increased public mistrust of large parts of the banking sector. The European Deposit Insurance Scheme (EDIS) therefore aims to strengthen public confidence in the European banking sector by strengthening the protection of bank depositors across the Banking Union.
According to the European Committee of the Regions' rapporteur, Hans-Jörg Duppré, President of the County (Landkreis) Südwestpfalz, these measures cannot be viewed in isolation, but must always go hand in hand with economic governance measures at Member State level. He therefore insists that certain conditions must be met before a European Deposit Insurance Scheme can be established: "The European Deposit Insurance Scheme can play an important role in enhancing the performance of financial institutes, strengthening the trust of citizens and enterprises in the financial system of the EU. However, crucial steps need to be implemented before such a European scheme can be established, including a significant reduction of risks of failure of financial institutes in the Member States. Furthermore, existing voluntary protection systems that go beyond the current proposal have to be fully integrated into a European Desposit Insurance Scheme."
The draft opinion, which was adopted by the Commission for Economic Policy in Kraków today, highlights further concerns. "The national deposit guarantee schemes will be particularly vulnerable, if they are not fully implemented and if the national funds are not provided with sufficient resources" it states. It also underlines the interdependence between a stable economy and the operations of local and regional banks, and of promotional banks. These institutions primarily provide financial support for policy measures at local, regional and national level.
Hans-Jörg Duppré is also keen to underline that the proposals cannot result in local and regional public banks being disadvantaged. "Most of the local and regional public banks in the Member states, are very different from private sector financial institutes" the draft opinion states. "Although they are refinanced on the capital market, their operations present a very low risk of insolvency due to the 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".
The draft opinion is now scheduled for adoption at the October Plenary Session.