Germany’s finance minister, Olaf Scholz, told the Financial Times on Wednesday that Berlin is ready to accept an EU-wide bank deposit reinsurance scheme.
The nod from Berlin comes as the prospect of Brexit means that the EU could become more vulnerable to financial pressure. Therefore, it is necessary that the eurozone’s banking system becomes interconnected and integrated.
“The need to deepen and complete the European banking union is undeniable. After years of discussion, the deadlock has to end.”
In an eight-page “Position Paper on the Target Image of the Banking Union” submitted to German magazine Der Spiegel, Scholz proposes a “European Reinsurance System” that would enhance the resilience of national deposit insurance across the eurozone, North and South.
By Wednesday afternoon, it was unclear whether Scholz’s position represents the views of the German government or the Social Democratic Party (SDP) alone. In a statement on Wednesday, the government spokesman for Steffen Seibert clarified that this debate had not formally taken place within the cabinet, thereby reducing Scholz’s view to a personal opinion.
That is not the end of the debate.
Scholz has said that a complete EU dependence for financial services on the US or China is not viable and, after Brexit, the eurozone needs to make headway. The view that the banking union needs to move forward has also been echoed by the incoming President of the European Commission, Ursula von der Leyen.
Still, it is certain that any scheme that can be perceived as a form of effective debt-mutualisation will be resisted both by the opposition Liberals, the AfD, and at least the Bavarian wing of the Christian Democrats (CSU).