Eurogroup issues statement on the future of the Banking Union

Since its creation in 2014, the Banking Union has made significant progress on an EU single rulebook, concerning the establishment of a new European architecture for supervision and resolution, and on reducing risks.

In its recent statement, the Banking Union has agreed to:

  1. immediately strengthen the common framework for bank crisis management and national deposit guarantee schemes (CDMI framework);
  2. create a more robust common protection for depositors;
  3. facilitate a more integrated single market for banking services; and
  4. encourage greater diversification of banks’ sovereign bond holdings in the EU.

The CDMI framework shall feature:

  • a harmonised public interest assessment;
  • broadened application of resolution tools in crisis management at European and national level, including for smaller and medium-sized banks, where the funding needed for effective use of resolution tools is available;
  • further harmonisation of the use of national deposit guarantee funds in crisis management, while ensuring appropriate flexibility for facilitating market exit of failing banks in a manner that preserves the value of the bank’s assets; and
  • harmonisation of targeted features of national bank insolvency laws.

The Eurogroup invited the European Commission, to consider bringing forward legislative proposals for a reformed CMDI framework and further invited legislators to complete any legislative work during this institutional cycle until early-2024.

Harshil Patel