For Brussels, it has long been seen as the final piece of the puzzle to unify the European Union’s banking system. For Berlin and Frankfurt, it was seen as one step too many on the road to mutualizing the continent’s debts – and making German taxpayers pay for past mistakes of others.
Welcome to the long-stalled fight over an EU-wide deposit insurance scheme, an effort to create a common pot to bail out depositors of banks that fail across the European Union. It’s a fight in which Germany seems to have won the first battle – and perhaps even the war.
After two years of pushing for a €43 billion common fund to be adopted by 2024, the European Commission now appears ready to break the deadlock by basically given up on the idea for the time being. The EU’s executive arm, in a new draft seen by Handelsblatt, says a common fund could be introduced in even slower steps, and only once banks have proven they have done a better job of winding down their debts of the past.