- Chancellor's rebuff is bluntest yet of the EU commission plan
- `Just ask the savings banks and cooperative banks': Merkel
German Chancellor Angela Merkel rejected plans for a common euro-area deposit insurance system, delivering the bluntest rebuff yet to European Commission Jean-Claude Juncker and tying her government’s position directly to the interests of Germany’s politically powerful savings banks.
In a speech to Germany’s lower house of parliament ahead of a two-day European Union summit meeting in Brussels, Merkel said the bloc’s leaders must focus on implementing regulation that’s already been negotiated to reduce risk in the financial system.
“The collectivization of European deposit insurance would do just the opposite,” Merkel told lawmakers on Wednesday. “That’s why we think it’s wrong and that’s why we reject it. Just ask the savings banks and cooperative banks.”
Merkel’s comments made clear that she fully supports her finance minister, Wolfgang Schaeuble, who has led the flank of euro-area member states that oppose the plan announced by Juncker in his in his state-of-the-union address on Sept. 9. Lawmakers in Germany’s parliament ratcheted up the pressure on Merkel last month when they approved a resolution that urged the government not to agree to the initiative.
The European Commission, the EU’s executive arm, presented its European Deposit Insurance Scheme on Nov. 24. If enacted, the new system would be phased in to 2024, allowing EU countries to put their own deposit-insurance programs in order and addressing Germany’s concerns about risk-pooling. Banks’ contributions to the EU system would be adjusted for the risks they pose to financial stability.
Common deposit insurance is seen by the savings banks in Europe’s largest economy as a threat because it would potentially make risk-averse banks liable for the actions of more adventurous lenders. Germany accounted for 29 percent, the largest share, of the 11.5 trillion euros of deposits by non-banks in the euro area in October, according to data compiled by Bloomberg.