Communication on the review of the crisis management and deposit insurance framework contributing to completing the Banking Union

Summary:

Communication adopted by the European Commission on 18 April 2023, providing an overview to a proposed review of the crisis management and deposit insurance framework in the context of the completion of the European Union's (EU) Banking Union.

Further information:

The creation of the Banking Union in 2014 was a response to the global financial crisis and the ensuing Euro area sovereign debt crisis. It sought to reinforce stability in the banking sector allowing it to support businesses and households thereafter. It also play a role in financing growth and investments, improving the EU's competitiveness and reinforcing the Economic and Monetary Union (EMU), helping the EU to face major structural challenges, as well as those stemming from elsewhere.

Two pillars of the Banking Union - the Single Supervisory Mechanism (SSM) and the Single Resolution Mechanism (SRM) - are fully operational. The third pillar - a European Deposit Insurance Scheme (EDIS) - is also key in reinforcing the resilience of the banking sector, but a political agreement has not yet been achieved. In December 2020, the Eurogroup was invited to prepare a timeline to fulfill the completion of the Banking Union. Subsequent discussions in the Eurogroup did not deliver such a workplan, but it was agreed that the common framework for the bank crisis management and deposit insurance (CMDI) should be strengthened as a next step.

The draft laws adopted by the European Commission alongside this Communication begin that process. The objective of the reform is to enhance the existing arrangements for managing failing banks in the EU. In particular, it is proposed to make the arrangements for managing the failure of smaller and medium-sized banks more effective in terms of their design and implementation. While discussions on the reform of the CDMI framework have occurred over several years, the latest banking crises in the United States (US) and Switzerland underlined the importance of ensuring EU arrangements are as robust and effective as possible.

• Directive amending Directive 2014/59/EU as regards early intervention measures, conditions for resolution and financing of resolution action
• Regulation amending Regulation (EU) No 806/2014 as regards early intervention measures, conditions for resolution and funding of resolution action
• Directive amending Directive 2014/49/EU as regards the scope of deposit protection, use of deposit guarantee schemes funds, cross-border cooperation, and transparency
• Directive amending Directive 2014/59/EU and Regulation (EU) No 806/2014 as regards certain aspects of the minimum requirement for own funds and eligible liabilities

Official

European Commission: Finance: Banking Union https://finance.ec.europa.eu/banking-and-banking-union/banking-union_en

European Commission: Publications: Reform of bank crisis management and deposit insurance framework https://finance.ec.europa.eu/publications/reform-bank-crisis-management-and-deposit-insurance-framework_en

European Commission: Press Release, 18/04/2023: Banking Union: Commission proposes reform of bank crisis management and deposit insurance framework https://ec.europa.eu/commission/presscorner/detail/en/ip_23_2250

European Commission: Questions and Answers: Reform of bank crisis management and deposit insurance framework (18 April 2023) https://ec.europa.eu/commission/presscorner/detail/en/qanda_23_2251

European Commission: Press remarks by Executive Vice-President Dombrovskis and Commissioner McGuinness at the press conference on the reform of the bank crisis management and deposit insurance (CMDI) framework (18 April 2023) https://ec.europa.eu/commission/presscorner/detail/en/speech_23_2359

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