22nd Mar 2018

Draghi sceptical on German bank union plan

  • Draghi: 'We can't have hundreds of people debating whether a bank is viable or not' (Photo:

European Central Bank (ECB) boss Mario Draghi has given a sceptical reaction to a German-led compromise on banking union, saying that it could create a regime "that is single in name only."

Speaking at a hearing with the European Parliament's economic affairs committee on Monday (16 December), Draghi urged deputies to agree "a strong and credible resolution mechanism" with ministers.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

The new rule-book should have "a single system, a single authority and a single fund," said Draghi, adding that he was "concerned that the decision making procedures may become overly complex".

"Everybody knows that these decisions must be taken instantly…we can't have hundreds of people debating whether a bank is viable or not," he told MEPs.

EU finance ministers will gather in Brussels this week in a bid to thrash out an agreement on a common resolution mechanism to wind up insolvent banks.

Governments will be required to set up bank-funded national resolution funds over a period of ten years to cover the costs of bank failure, which will eventually be worth around €60 billion. But it is unclear what should happen if a bank failure cannot be covered by the resolution fund.

Berlin has consistently voiced its opposition to the prospect of a single resolution fund, fearing that as the bloc's biggest member state, its taxpayers could be made liable for the debts of all banks across the eurozone.

The latest compromise prepared by the Lithuanian EU presidency would set up an inter-governmental treaty to govern whether countries could have access to each other's funds during the first ten years of the regime.

It would also establish a single resolution board composed of national and EU officials charged with deciding on whether to take a bank into resolution.

For their part, MEPs on the committee will adopt their own negotiating position on the resolution mechanism drafted by Portuguese centre-left deputy Elisa Ferreira on Tuesday (17 December).

Deputies have already signalled their opposition to a treaty which would cut them out of the decision-making process. They are also expected to call for a single fund with a credit line from the eurozone's bailout fund, the European Stability Mechanism (ESM).

The ECB chief said that agreement on the resolution regime was "essential for market perception". He added that the ESM should be used to provide direct recapitalization to banks if needed, also an idea strongly resisted by Germany.

Defending the ECB

Meanwhile, following questions from German deputies, a combative Draghi defended the ECB's Outright Monetary Transactions (OMT) instrument which gives it the ability to buy up potentially unlimited supplies of eurozone government bonds.

Although the Frankfurt-based bank has not yet used the scheme to purchase bonds, it has been the subject of a legal challenge from the German Bundesbank which argues that it goes beyond the bank's mandate of controlling price stability.

"We run monetary policy for the whole of the eurozone," he said, adding that "OMT has been welcomed world-wide as a success."

EU ministers clinch deal on failed banks

EU ministers have agreed new rules on how to wind up failed banks - the key pillar of a "banking union" designed to stop a repeat of the crisis.

EU reaches deal to protect bank savings

EU lawmakers have agreed the first €100,000 of savings per depositor and per bank will be guaranteed if the bank gets into difficulty.


EU praises Turkey on migrant deal despite Greek misery

The EU-Turkey deal was agreed two years ago in Brussels. Focus has largely been on reducing migrant flows across the Mediterranean and helping Syrian refugees in Turkey, while the plight of those on the Greek islands are ignored.

News in Brief

  1. EU to have 'immediate' trade talks with Trump
  2. Separatist activist renounces Catalonia leadership candidacy
  3. EU puts conditions on Bayer-Monsanto merger
  4. Hard Brexit would hit poorer Irish households hardest
  5. Finland hosts secretive North Korean talks
  6. EU to unveil 3% tax on digital giants
  7. German elected S&D leader in European Parliament
  8. Germany: nearly €350m child benefit goes abroad

Stakeholders' Highlights

  1. EUobserverStart a Career in EU Media. Apply Now to Become Our Next Sales Associate
  2. EUobserverHiring - Finance Officer With Accounting Degree or Experience - Apply Now!
  3. ECR GroupAn Opportunity to Help Shape a Better Future for Europe
  4. Counter BalanceControversial Turkish Azerbaijani Gas Pipeline Gets Major EU Loan
  5. World VisionSyria’s Children ‘At Risk of Never Fully Recovering', New Study Finds
  6. Macedonian Human Rights MovementMeets with US Congress Member to Denounce Anti-Macedonian Name Negotiations
  7. Martens CentreEuropean Defence Union: Time to Aim High?
  8. UNESDAWatch UNESDA’s President Toast Its 60th Anniversary Year
  9. AJC Transatlantic InstituteAJC Condemns MEP Ana Gomes’s Anti-Semitic Remark, Calls for Disciplinary Action
  10. EPSUEU Commissioners Deny 9.8 Million Workers Legal Minimum Standards on Information Rights
  11. ACCAAppropriate Risk Management is Crucial for Effective Strategic Leadership
  12. EPSUWill the Circular Economy be an Economy With no Workers?

Latest News

  1. EU leaders set for 'stormy debate' on digital tax at summit
  2. EU praises Turkey on migrant deal despite Greek misery
  3. Judicial reforms 'restore balance', Poland tells EU
  4. Whistleblower fears for life as US arrests Malta bank chair
  5. Behind the scenes at Monday's EU talks on Russia
  6. US yet to push on Nord Stream 2 sanctions
  7. EU mulls coercion to get refugee kids' fingerprints
  8. Five east European states prevent new CAP consensus