Editorial Board
Europe’s Backward Step on Banking Union
Brussels is wrong to water down its plans for joint deposit insurance.
Banking union requires more than a central bank.
Photographer: Daniel Roland/AFP/Getty ImagesAs part of its plan to complete the euro zone's so-called banking union, the European Commission has presented a new proposal for collectively insuring bank deposits. Such a scheme is badly needed -- but the new idea falls short. By leaving too much risk with national governments, it fails to address a critical weakness of the system.
The commission is responding to the concerns of Germany and others, which fear being saddled with the consequences of their partners' financial mismanagement. That fear is understandable, but the banking union won't work without closer collaboration and sharing of risk. The EU needs to think again.