Government takes view that risk reduction essential for completion of EU Banking Union
The Finnish Government considers that before progressing to a European deposit insurance scheme, banking sector risks should be reduced considerably.
On 11 October, the European Commission published a communication on completing the Banking Union. According to the Commission, proposals already presented will reduce banking sector risks to such an extent that Member States should now move forward in risk sharing.
Risk sharing would entail the creation of a European deposit insurance scheme and a common backstop for the Single Resolution Fund. The purpose of the backstop is to secure resolution funding in cases where the resources in the Single Resolution Fund are insufficient.
Risks must be reduced tangibly and verifiably
The Finnish Government will be ready to proceed towards a European deposit insurance scheme and a common backstop for the Single Resolution Fund only when banking sector risks have been reduced and shared to a considerable extent and in a way that is tangible and verifiable. The measures proposed by the European Commission in its communication are, for the most part, already in preparation and are not sufficient for reducing and sharing banking sector risks.
The Government will assess the extent of risk reduction on the basis of improvements in banking sector balance sheets and the robustness of banking risk regulation.
On Friday 10 November, the Ministerial Committee on European Union Affairs set out the Government’s position regarding completion of the Banking Union, and the Ministry of Finance submitted a report (a ‘Europe communication’) to Parliament on the matter. A Europe communication is a report to notify Parliament about a matter (other than legislation, the budget and international treaties) being prepared in the European Union.
Europe communication concerning completion of the Banking Union (in Finnish)
Europe communication of the Prime Minister’s office concerning deepening of the Economic and Monetary Union (in Finnish)
European Commission press release concerning completion of the Banking Union (11 October)
Jaakko Weuro, Ministerial Adviser, tel. +358 295 530302
Pauli Kariniemi, Senior Ministerial Adviser, Financial Affairs, tel. +358 295 30210