A European deposit-guarantee system will have to wait until financial-stability measures already on the books, such as common bank resolution rules, are fully implemented, German Finance Minister Wolfgang Schaeuble said.

Starting a debate on a euro-area deposit-guarantee system now would “put the cart before the horse,” Schaeuble told reporters in Luxembourg on Saturday after a meeting of European Union finance ministers. “The important point now is to implement what has been agreed.”

One precondition for deposit-insurance talks is for all EU countries to enact the Bank Recovery and Resolution Directive, which sets out rules for saving or shuttering lenders, Schaeuble said. It’s “primarily a question of the correct sequencing,” he said. His comments echoed a position paper prepared by the German government for the meeting.

This debate reignited on Sept. 9, when European Commission President Jean-Claude Juncker said “a more common deposit guarantee system is urgently needed,” and promised a “legislative proposal on the first steps” by year-end.

In Luxembourg, Vice President Valdis Dombrovskis said the commission would propose a two-stage approach, starting with a “reinsurance scheme” for national systems and followed by a “fully fledged European deposit insurance scheme.”

‘General Features’

Dombrovskis said the commission would put out initial proposals in October for fleshing out EU plans for strengthening the economic and monetary union. On a common deposit guarantee, the commission plans to set out “general features” first, then consult with member states before coming out with a legislative proposal, he said.

In its position paper, the German government effectively laid out a road map to a stronger banking union, including a common deposit guarantee. In addition to implementation of BRRD, the paper lists steps such as strengthening the euro area’s Single Resolution Mechanism by agreeing on bridge financing for the SRM’s fund to ensure it has sufficient firepower as it’s gradually filled from bank levies over eight years to its target of 55 billion euros ($62.4 billion).

Bridge financing for the Single Resolution Fund was discussed by EU finance ministers in Luxembourg. European Central Bank Executive Board member Benoit Coeure said “it’s very important that this new institution starts operating with full credibility.”

First Step

“Let me again stress the urgency of the discussion,” he said.

Schaeuble said that payments into the resolution fund must begin before bridge financing is considered. “We can’t talk about credit lines and the like when we haven’t implemented in a first step what has been agreed.”

The biggest euro-area banks will put 2.8 billion euros this year into crisis funds intended to keep taxpayers off the hook for meltdowns in the financial industry. The size of the contributions that 33 of the largest euro-area banks say they are making suggest the SRM is on track. The 2.8 billion euros those banks have set aside via national funds is equal to 5.1 percent of the SRM’s target volume.