We said yesterday that the two legs of the banking union already in operation (bank supervision and restructuring or resolution) guarantee 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 . Therefore, it is to be expected that the calm returned to the markets will continue.
But we must not forget 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 abandon 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, which are fed with contributions from their banks (in Spain, the Deposit Guarantee Fund of credit institutions already accumulates some 6,000 million euros).
Unfinished banking union? Despite the fact that a roadmap had been designed since 2015 that should lead, in 2024, to a common deposit guarantee fund, this has not been possible: German and Italian reluctance has made it unfeasible.
The German opposition translates its aversion to the pooling of risks between countries; prevention for two different reasons. First, due to the profound differences between countries in non-performing loans (NPLs): in 2015, 17% of credit for Italian banks, 8.8% for Spanish banks, 4.6% for the French or 3.9% for the German; However, its sharp reduction until September 2022 (around 2.6% for Italy and Spain, 1.8% for France and 1.0% for Germany) has deactivated this argument.
Second, today the German obstruction requires limiting public securities held by banks. Germany now conditions the implementation of the single deposit guarantee system to assess the risks that 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 deposits of the south. A position that reflects that the weight of Treasury bonds (of any country) in 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 US, covers up to $250,000; a body that does not exist today in the European Union. And, as the banking vicissitudes in the stock market and the challenges facing the consolidation of the European project have shown, it is in our best interest to close this long labor of the banking union now. As long as it remains unfinished, the threats are still there. Latent, but real.
