Former Labour prime minister Alfred Sant said the urgent establishment of the European Deposit Insurance Scheme (EDIS) would guarantee depositors a full refund of their money should a European bank they deposit their money in, fail.
In his intervention on the Banking Union annual report for 2023 at a plenary debate of the European Parliament, Labour MEP Alfred Sant concurred with the calls for the completion of the banking union.
The report was adopted with 372 votes in favour, 155 votes against and 132 abstentions. Alfred Sant voted in favour.
Sant called for the swift introduction of EDIS to reinforce the commitment to a robust and resilient European banking system.
“A case in point is the treatment regarding the roll-back of the sovereign debt-bank nexus. Correct as the approach is overall, its application to small-scale, peripheral members of the European Union could prove toxic,” he warned, highlighting the insufficient leeway for the flexible implementation of banking policies on a European basis.
Sovereign debt-bank nexus refers to the interconnectedness and potential risks between sovereign government and banks within the European Union’s financial system.
The completion of the Banking Union is seen as a crucial step to address the sovereign-bank nexus and prevent a “doom-loop”, where financial troubles in one sector could negatively impact the other. This will enhance financial stability and reduce the risk of taxpayer funded bailouts.
Sant agreed with the multifaceted benefits that a fully developed banking union would bring including stability and lower costs for customers. However, he stressed that the report does not take into account the need for the EU to develop globally competitive banking units able to compete with US major banks and other bank behemoths.
“A question that still needs to be answered is whether the absorption by larger conglomerates of most of Europe’s smaller banks is acceptable,” Sant said.
