MNI: FinMins Stuck On Draft EU-wide Deposit Insurance Scheme

--Ecofin To Adopt Report Highlighting Lack of Significant Progress

--EU Commission's October Push Didn't Trigger Breakthrough

by Jean Comte

     LONDON (MNI) - European Union finance ministers are Tuesday set to adopt a

progress report on the draft European Deposit Insurance Scheme -- a scheme first

proposed by the European Commission in 2015, but blocked since by member States.

     But the draft progress report, obtained by Market News, makes clear that

more work is still needed in all areas before an agreement can be reached. "We

progressed on some technicalities, but much more is needed," confirmed one

diplomatic source.

--GERMANY REMAINS VOCAL CRITIC OF SCHEME

     Germany has been the most vocal opponent of the scheme, as it fears its

banks may be at risk to pay out to depositors at more profligate institutions. 

     For this reason, Germany, with other member states, said they first wanted

a deal on a "risk-reducing measures" package for the banking sector before

agreeing on EDIS. This package remains under the scrutiny of member states.

--NO AUTUMN BREAKTHROUGH, DESPITE COMMISSION PUSH

     The Commission tried to unblock the jam in early October, when it set out

different options -- namely conditions to move to the co-insurance stage, and a

smaller scope for the EU system in the first years (covering liquidity

shortfalls, but not losses).

     But that did not produce a breakthrough. "We said we wanted first an

agreement on the risk reduction measures," said an other diplomat. "That didn't

change with the EU Commission communication."

     Things are moving ahead a little quicker in the European Parliament, the

co-legislator on this issue. Three sources from different political parties told

Market News that, after a long time without any progress, things have started

moving again.

     "It is not directly linked to the EU Commission proposal," said one of

them. "But obviously, no one here wants the file to get stuck."

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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