The EU’s deposit protection will come. Chancellor Angela Merkel leads a half-hearted defensive struggle. The resolution position speaks against an exception for Germany. Should there be a larger bank crash, the German savers will bear liability.
Originally appeared at DWN, translated by Karin exclusively for SouthFront
Germany has as good as lost the defensive battle against the common deposit insurance in the EU. Although the Bundesbank (Federal Bank) now warns officially against the consequences and says there will be a liability without any control. But the warnings of the Bundesbank have been unheard in other subjects as well: This applies to the low interest rates as well as the various Euro rescue maneuvers. Even Chancellor Angela Merkel, who still categorically excludes today that it will come to this, has never enforced her originally seemingly tough position in all other issues of Euro rescue: The fact that the ESM, shortly before Christmas, pays out another one billion euros to the government in Greece for the debt service is for many barely worth mentioning, let alone criticize.
A senior banker describes to the German Economic News that the situation is very clear:
“The communitarisation of the Deposit Guarantee Schemes is decided (Regulation of the European Parliament and of the Council, Stand 24th November 2015, issued in Strasbourg). It is a sophisticated “proposal”, which contains 69 pages on the precise regulations. About the design the European Parliament and the Council of the European Union will vote. Both have simple majority decisions. Parliament has already expressed its willingness. The Council of the European Union will decide the same way as their subordinate Euro Group of Finance Ministers will decide. Its chairman Jeroen Dijsselbloem, Netherlands has declared twice this month that the communitarisation will come as planned and there will be no special role for the German deposit protection. At the moment it’s all about the time frame, if at the latest 2024 or earlier. “
In practice, says the Banker, this would mean:
“Even today, individually balances are only protected up to 100,000 euros. The Deposit Guarantee Schemes of savings and cooperative banks are based on a voluntary institution assurance of the private banks on own capital. These are optional extras not found again in the draft, but it says there that every citizen will be, up to a total of 100,000 Euros, for the Community deposit insurance individually with their savings assets liable. Discussed will be further whether the EU Deposit Guarantee should be for the EU or only for the Euro zone.
For the German depositor, not only the ordinary saver, communitarisation means that others will decide about his assets, without consulting him. The 100,000 limits are to be designed so that social criteria are developed, so that the general access is already restricted. “
The British government has stated that British citizens are neither liable for the EU nor for the Euro zone. The EU’s deposit guarantee is an important building block for the “Brexit” (“Proposed referendum on United Kingdom membership of the European Union”). The British Government was informed that there would be no discussion on the participation of British savers, even if Great Britain will not sign the regulation.
As an example, the EU gives the United States with their social security and DGS (deposit guarantee scheme). This is a coercive system of a State. This also explains why the EU wants to introduce this system: It still aims at a centralized state. After the introduction of the Euro, the task of the national borders and the direct protection of the EU’s external borders by its own border guards and the joint police, is the shared competence liability for the banks the logical next step in this direction.
The central associations of saving banks and cooperative banks have indeed written to EU President Jean-Claude Juncker, however, only gotten a delaying response. The associations trust the federal government and hope that it fights the fight to the bitter end. How much worth statements of Juncker are have shown the Russia sanctions: Juncker had said a few weeks ago, the EU had to return to a cooperative relationship with Russia. A little later the renewal of sanctions was adopted – without further discussion. About a response of Juncker on the subject is unknown.
The German savers are therefore well advised to orientate themselves how they want to manage their assets or savings. Yet these are relatively safe in the current systems. However, for too long the depositors should not be lulled into this false sense of security.