PARIS — The EU has robust banking safeguards in place to protect its lenders against the prospect of a new crisis, the European Commission’s economic chief said Thursday, adding that additional rules are also around the corner.
“From a supervisory point of view, we are not in a vacuum,” Paolo Gentiloni said at POLITICO’s Finance Summit after UBS bailed out its Swiss rival Credit Suisse, raising fears that a crisis born in the U.S. was spreading to Europe. “We are, I think, supervising our banking system in a very effective way.”
But improvements can still be made. EU legislators have been unable to agree on a shared deposit insurance system to back up national cash pots. As a compromise, eurozone finance ministers have called on the Commission to propose measures that will close loopholes in bank crisis management and deposit insurance (CMDI).
“The Commission will do it in the second quarter of this year,” the Italian said after the proposal had disappeared from the legislative agenda of the EU’s executive arm, raising fears that the initiative had been shelved. That’s not the case. But pundits shouldn’t make it sound like EU banks are sitting ducks. “We can be reassured that the European banking system is stronger than it has been,” he said.