EU leaders omitted a reference to banking union from the conclusions of Thursday’s discussion of the bloc’s economic situation because of opposition from Germany, according to two officials familiar with the deliberations.
Leaders said they’d discuss economic issues in June and “will discuss the progress achieved in the work toward completing the Economic and Monetary Union,” according to the published conclusions. Portugal had pushed to add the phrase “notably the banking union” to that sentence, while German Chancellor Angela Merkel contended the addition wasn’t warranted, the officials said.
This week’s debate echoes a similar standoff in October, when EU leaders dropped references to completing banking union in the final draft of their summit conclusions. The euro area has already adopted common banking supervision and resolution frameworks, while stopping short of creating a common deposit insurance framework.
Germany has led opposition to pooling deposit guarantees, saying it can’t proceed until the euro area has addressed broader questions about sovereign debt risk and financial stability. The European Commission last year proposed a plan, supported by the European Central Bank, to build a joint deposit insurance system over eight years.
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