IMF Calls on Euro Authorities to Stand Behind Deposit Insurance

The International Monetary Fund called on the European Central Bank and euro-area authorities to stand behind deposit insurance within the currency area to help a common backstop take effect and forestall bank runs.

European leaders should make banking union their immediate priority in the efforts to fight the debt crisis, the IMF said in staff reports today related to its annual review of the euro area. The Washington-based lender called for a rapid announcement of a timetable toward common deposit insurance, initially supported by the ECB or some other joint resource until it could eventually be funded by the banks.