EESC info: "What is the Committee's position on the Eurogroup's proposal and subsequent legislative proposals on banking union? In particular, what is it stance on crisis management and deposit guarantees?"

Giuseppe Guerini: On 18 April 2023, the European Commission published the Bank crisis management and deposit insurance package, which aims to broaden the scope of application of the resolution regime to small and medium-sized banks, preserve financial stability, protect taxpayers and depositors, and support the real economy and its competitiveness.

The EESC opinion, which was requested by the Spanish presidency of the Council, endorses the Commission proposal, but stresses the need to strike a balance between flexibility and predictability to respond to banking crises.

As stated in the opinion, "recent banking crises have shown the importance of a speedy and flexible action, and a swift transfer of a troubled bank to a healthy one.

The EESC is concerned about expanding the scope of the resolution and its capital requirements to smaller and local banks, as this could impact these entities negatively.

Henceforth, a beefed-up public interest assessment, which will determine if the resolution regime is applicable, must be properly balanced and guarantee a proportional application, while minimising uncertainty as to how a crisis would be solved.

A pragmatic and flexible procedure should be achieved in terms of the regulatory approach, the tools to be used and the speed of execution, the implications of the response, the cooperation among stakeholders, and the nature of the resources used. This will prevent damage to the interest of smaller banks, especially local banks, and better protect the economic ecosystem where they operate.

The European Deposit Guarantee Scheme is essential for the completion of the Banking Union, and the use of the Deposit Guarantee Scheme and the Single Resolution Fund are steps towards it. However, until this is a reality, inefficiencies will continue to exist and markets will still be fragmented.