- Infringement letters sent to 18 nations, 14 now need to comply
- Bank resolution rules still need action from nine countries
The European Union is pursuing infringement proceedings against 14 member countries that haven’t changed their national laws to comply with the bloc’s new rules for deposit guarantee systems.
Belgium, the Czech Republic, Estonia, Greece, Italy, Cyprus, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Romania, Slovenia, and Sweden had not passed some or all of the necessary legislation as of Nov. 30, according to data from the European Commission, the EU’s executive arm. Four other nations also received formal notice that they were in line for infringement proceedings and have since brought their laws into compliance.
Jonathan Hill, the EU commissioner for financial services, said on Nov. 30 that countries that don’t adopt the deposit-insurance rules swiftly would face disciplinary measures. All 28 nations need to adjust their national laws to reflect the EU standards for safeguarding bank accounts to make sure each country provides a baseline level of protection.
Deposit insurance rules are a centerpiece of efforts to strengthen the 19-nation euro area and complete its banking union. The European Commission last month unveiled plans to build a common deposit guarantee scheme within the currency zone, while also encouraging all 28 EU nations to adopt the previously enacted rules.
“We must weaken the link between banks and sovereigns, and put into practice the agreed rules whereby taxpayers should not be first in line to pay for failing banks,” EU Commission Vice President Valdis Dombrovskis said when the deposit insurance plans were rolled out.
The commission is also pressing nations to adopt new EU rules on handling bank resolutions. Nine out of the 28 nations haven’t passed all the laws required by the Bank Recovery and Resolution Directive: Belgium, Czech Republic, Cyprus, Lithuania, Luxembourg, Poland, Romania, Slovenia, and Sweden, the data show. Five of those nations face EU Court of Justice lawsuits. The Netherlands was in line to face the top court and has since enacted the needed laws.
On the resolution and deposit-guarantee rules, countries are speeding up their efforts and some nations are nearly finished with the required changes, according to the commission.
All but two of the 19 euro-area countries have now ratified the banking union’s Single Resolution Mechanism and its accompanying fund. Greece faces procedural delays, and Luxembourg also has not passed needed legislation, the commission said.