Is the German fortress crumbling?

The question arises when it comes to common deposit insurance for European bank customers.

So far, the German government has withstood the plans of the European Central Bank (ECB) and the EU Commission and called for the reduction of bad loans on the balance sheets of southern European banks as a prerequisite.

But whether a new government made up of the SPD, Greens and FDP will dare to take a controversial course in European politics cannot be foreseen at the moment.

However, German savers are likely to see it critically if their funds in their bank accounts are no longer protected by German security institutions, but by European protection systems, which Greek and Italian banks could also access in an emergency.

Markus Frühauf

Editor in business.

  • Follow I follow

It is striking how recently European institutions have been advocating the completion of the European Banking Union, knowing full well that this requires joint deposit insurance.

This was shown by an online ECB conference on banking supervision held on Tuesday and Wednesday.

On the first day, ECB President Christine Lagarde called for common rules for the European banking market.

The head of the ECB banking regulator Andrea Enria, who had called for a European deposit guarantee, was more explicit, as the FAZ reported in its Wednesday edition.

"Don't wait for the next banking crisis"

On Wednesday, EU financial market commissioner Mairead McGuinness followed up at the ECB conference. The banking union is only complete with a joint deposit guarantee. With a common safety net, European banks would be stronger and more resilient, which would also restore customer confidence. Ultimately, the banks would then also be less dependent on state aid in emergencies. For McGuinness, completing the banking union shouldn't take too long. “We cannot wait for the next banking crisis,” said the Irish woman. The next steps towards banking union were one of the dominant themes at the ECB conference. Because it is understood by representatives of the ECB, the Commission and other EU authorities as an essential prerequisite for cross-border consolidation,to create large European banks that can compete with American institutions.

Another important topic was dealing with climate risks.

ECB director Frank Elderson took the 113 European banks directly supervised by the central bank to court.

Not a single one of them comes close to our expectations, said the Dutchman, who still expects a long way to go.

Things will get serious in March 2022, when the ECB will carry out a climate stress test among the banks.

It is about the resilience of the institutes to the risks of climate change.

Natural disasters can weaken credit quality or receivables and holdings in critical industries such as the oil and automotive industries can lose value.

Elderson also noted the growing legal risks related to climate change.