Germany’s halt to €5tn bank guarantee idea

An ambitious blueprint to guarantee the whole amount of deposits in eurozone banks have been stopped by German objections, Financial Times revealed today. EU officials agreed a eurozone banking union with regulation and control shifted to Brussels, and the guarantee over deposits was intended as a first move in that direction. In the first drafts of the plan, the Commission next year was to propose a new agency, the European Deposit Insurance and Resolution Authority (EDIRA) with control over a new European Deposit Guarantee and Resolution Fund (EDGAR). “EDIRA would become the single resolution authority on the bank union”, the draft said, would be financed through a regular levy on eurozone banks and would potentially have the backing of the eurozone’s €500bn rescue fund.
Will the Germans’ move eventually postpone the risky and costly bank union to a safer and effective political and fiscal union in Europe?