We said yesterday that the two legs of the banking union already in operation (banking supervision and restructuring or resolution) constitute a guarantee of the resistance of the European financial system and, in the event of losses, clarity on which creditors, and in what order, must pay the bill. For this reason, it is necessary to expect that the calm returned to the markets will be maintained.
But it must not be forgotten that this union is incomplete. The single deposit guarantee mechanism is missing, the need for which became evident in the financial crisis: the possibility that some country (such as Greece) would leave the euro explained the flight of deposits to Germany. But until today, the 100,000 euros per person and account are guaranteed by national funds that are nourished by contributions from their banks (in Spain, the Deposit Guarantee Fund of Credit Institutions already accumulates around 6,000 million euros).
Unfinished banking union? Although a roadmap has been designed since 2015 that should lead to a common deposit guarantee fund in 2024, this has not been possible: German and Italian reluctance have made it unfeasible.
The German opposition translates its aversion to the mutualization of risks between countries; a prevention that has two different reasons. First, the profound differences according to the country in non-performing loans (NPL, non-performing loans): in 2015, 17% of the credit for the Italian bank, 8.8% for the Spanish bank, 4 .6% for the French or 3.9% for the German. However, its strong reduction until September 2022 (around 2.6% for Italy and Spain, 1.8% for France and 1.0% for Germany) has disabled this argument .
Second, today the German obstruction demands limiting the public securities held by the bank. Germany now conditions the launch of the single deposit guarantee system on assessing the risks that the public debt may have: another version of its refusal to transfers between countries, which would end up being generated if a new crisis forced the common fund to guarantee southern deposits. A position that reflects that the weight of Treasury bonds (of any country) on the balance sheets of Italian or Spanish banks (12.3% and 14.8% of their assets, respectively) far exceeds that of Germany (3, 1%) or France (8.3%). Italy, logically, does not accept it.
relevant? Yes it is. In the Silicon Valley Bank crisis, their deposits were guaranteed by the federal institution, which in the United States covers up to $250,000; a body that does not exist today in the European Union. And, as shown by the banking vicissitudes on the stock market and the challenges facing the consolidation of the European project, it is up to us to close this long-standing part of the banking union. As long as it remains unfinished, the threats continue. Latent but real.
