The European Commission today published a communication (White Paper) calling for completion of Europe's Banking Union by 2018.
According to the Commission, the Banking Union must be completed to deliver its full potential in making the Economic and Monetary Union (EMU) more stable and resilient to shocks while limiting the need for public risk sharing.
The Banking Union will cover deposit guarantee schemes, common financial backstops (to ensure taxpayers do not have to bailout bust banks), banking supervision, dealing with non-performing loans across Europe and getting banks to diversify their portfolios, among other things.
These proposals need to be agreed by the European Parliament and the Council of Ministers from each Member State. The Commission is urging them to press ahead with completing Banking Union so "economic progress across the EU can be reinforced".
This comes ahead of the December Euro Summit, where completion of the Banking Union will be part of discussions on further deepening the EMU. Together with the Capital Markets Union (CMU), a complete Banking Union will promote a stable and integrated financial system in the EU, said the Commission.
Valdis Dombrovskis, Vice-President for Financial Stability, Financial Services and Capital Markets Union said, "A complete Banking Union is essential for the future of the Economic and Monetary Union and for a financial system that supports jobs and growth. We want a banking sector that absorbs crises and shares risks via private channels, thus ensuring that taxpayers are not first in line to pay. Today, we are presenting pragmatic ideas to move forward with risk sharing and risk reduction in parallel. We hope that these will be useful food for thought for EU co-legislators to reach consensus on the remaining measures by 2018."
You can see the Commission proposals in more detail in the Fact Sheet, Q&A and full text of the Communication on the live links in the original release here.