By Hans Bentzien
FRANKFURT (Dow Jones) — Elke König, head of the European bank resolution authority SRM, is assuming after the failure of negotiations on a uniform European deposit insurance (Edis) that the reform agenda decided by the EU will soon lead to the question of such a security mechanism again . However, she doesn’t think Edis will be a reality anytime soon, as she said at a Single Resolution Mechanism (SRM)-European Central Bank (ECB) conference.
The euro finance ministers had recently put the Edis project on the back burner due to persistent differences of opinion and decided instead to dedicate themselves, among other things, to a uniform set of rules for the resolution of medium-sized banks. Such institutes are currently being wound up according to national rules, although taxpayers’ money has definitely been used in recent times.
The EU would therefore also like to subject medium-sized banks to a uniform set of rules or, as König put it, “broaden access to settlement”. “Then you have to know how you want to finance it, if necessary,” said the SRM boss. According to the finance ministers, this must be done on the one hand with the banks’ own funds (Mrel) and on the other hand with instruments financed by industry. “And that means for me primarily deposit guarantee systems,” she said.
According to König, however, the use of such national systems, the sale of portfolios and upper limits for this must then also be harmonised. “There are many steps that fundamentally pave the way for Edis,” she said.
Elke König will be retiring in six months. When asked if Edis would be around before the end of her tenure, she replied, “I’m not even sure we’ll see Edis during my successor’s tenure.”
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(END) Dow Jones Newswires
June 23, 2022 12:03 ET (16:03 GMT)