Nathan Sheets, global head of international economics at Citigroup Inc., said European Union leaders meeting at a summit starting in Brussels tomorrow may agree on a program to ensure the safety of bank deposits.
“I do think we are going to hear from the summit some move toward common deposit insurance probably coupled with common bank supervision and regulation,” Sheets, former head of international finance for the Federal Reserve, said in a Bloomberg Television interview on the “In The Loop” program in New York. “The key question is what is the timetable.”
“The markets want to see something happen in weeks or months,” Sheets said. “The euro-area leaders tend to think in terms of years or decades. Bridging that divide in perspectives has really been one of the fundamental issues.”
If the plan were put in place in a few months, “that would go a long way to restoring confidence,” Sheets said.
The leaders will discuss a plan for closer European integration spearheaded by EU President Herman Van Rompuy that centers on common banking supervision and deposit insurance along with a “criteria-based and phased” move toward joint debt issuance. It also suggests the group could impose upper limits on annual budgets and debt levels of nations that use the euro.