A plan to advance banking integration in the eurozone failed to garner support from eurozone countries, ruling out the prospect of breaking a long-running stalemate.
Eurogroup President and Irish Finance Minister Paschal Donohoe presented the plan early last month, detailing possible pathways into four parallel work streams, with the aim of breaking political blockages and securing success by 2024. Negotiations on the plan have been ongoing since, with a goal of reaching consensus at a meeting of eurozone finance ministers next Thursday.
But on Wednesday, national envoys remained entrenched in their national positions, refusing to accept the work plan, three diplomats and officials told POLITICO. This means there is no chance of progress on completing the banking union, with one describing it as an implosion. The stalemate could force the Commission to revise its own proposals, diplomats said.
The project is mired in compromises, and getting countries to move has proven impossible. Italy does not accept a proposal to limit the exposure of national banks to sovereign debt. Germany, in turn, rejects plans for EDIS, the EU-level deposit insurance scheme, to take full responsibility in the event of bank failure. France’s demand for so-called “liquidity waivers”, allowing multinational banks more freedom to transfer capital across borders, is being opposed by Belgium, Luxembourg and others who fear the move cause local banking crises in host countries.
The Eurogroup chief still aims to make partial progress on the fourth workstream on banking crisis management, which has fewer links to the rest of the package, and he hopes that countries will invite the Commission to present proposals to this end next Thursday.
These measures would aim to harmonize the way countries deal with failing banks, including the leeway policymakers should have to bail out financial institutions versus handing over management to the Single Resolution Board. They could also include a review of state aid rules for banks in line with the existing crisis management framework.
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