ECB and Eurozone central banks: we’d like a single market with the identical deposit ensures | EUROtoday

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«The central banks of the euro space are united: the decisive step to strengthen European competitiveness is a true single banking market the place capital and liquidity can transfer throughout borders and all deposits are protected equally.” The ECB vice president says so Luis de Guindos in the press release on the Eurosystem report – ECB and all the national central banks of the Eurozone – on the consultation of the EU Commission on competitiveness of the banking sector. “More integrated markets and more cross-border competition” help economies of scale and diversification, says the head of Supervision Claudia Buch.

The Eurosystem report therefore calls for aacceleration of banking integration European, indicating in the fragmentation one of the main brakes on competitiveness. The importance of the euro area functioning «as one single jurisdiction» and that capital and liquidity can circulate freely in cross-border banking groups. The document dedicates an entire chapter to «obstacles to cross-border banking integration», explicitly reporting that the «prudential barriers and not prudential to cross-border integration hinder the activity of euro area banks”.

What it takes to beat the stalemate

To overcome the stalemate, the ECB board urges concrete progress on Edisthe European deposit insurance coverage scheme, the third pillar of the banking union which goals to ensure a uniform safety of deposits all through the euro space. The central institute asks for «concrete steps in the direction of the finalization» of the mechanism, «with a clear calendar», underlining {that a} totally operational system «is important to guard all deposits equally and strengthen monetary stability».

Among the proposals additionally a simplification of the macroprudential framework, with the discount of capital buffers from 5 to 2. Buffers are extra cushions of capital that banks should maintain past the minimal necessities to soak up losses and stop crises. Today they embody, amongst others, the capital conservation buffer, the countercyclical buffer and people for systemic banks. The Eurosystem’s proposal envisages: group them into two classes: a “non-releasable”, structural buffer, at all times lively, and a “releasable” buffer, for use in disaster phases to help credit score. The goal, it’s underlined, is to simplify the principles with out lowering the resilience of the system, sustaining excessive requirements however making the European framework more practical and coherent.