Euro Zone finance ministers, are scaling back ambitions of talks aimed at completing the Banking Union to focus more precisely on how to streamline bank failure and bank resolution procedures. The shift occurred at a meeting of euro finance officials last week, officials have said, when the differences between member states became obviously unbridgeable.
Finance ministers have worked hard in recent weeks to agree a comprehensive work plan on Banking Union, but at a preparatory meeting for this Thursday’s Eurogroup, there was said to have been a “realisation that there were still quite a lot of issues still to be solved.”
“The current economic and geopolitical context is not helping make some member states move toward compromise on certain issues. That is why ambition on Banking Union had to be reassessed,” one official said.
Asked whether the banking union was now dead, another EU official said "I wouln't say dead, just sleeping'.
It has been clear for some time that the worsening economic situation, exacerbated by Russia’s invasion of Ukraine in February, has made it more difficult for Italy to compromise on regulatory treatment of sovereign exposures and for Germany to concede on risk sharing and deposit insurance. The work of the Eurogroup on Banking Union will now refocus on making concrete short-term progress, rather than agreeing a comprehensive plan.
“And -- in that sense -- the lowest is the crisis management framework,” the official said.
Specifically, work will now concentrate on improving the EU’s bank failure and resolution regime, including the BRRD regime, the operations of the Single Resolution Board and how the EU’s State Aid framework interacts with the overall framework.
Finance ministers are now drafting a joint statement on the new approach, which will be released Thursday, with preparatory work continuing.