EU deposit insurance: The banking union is in danger of failing

With a special meeting, the head of the Eurogroup Paschal Donohoe wants to encourage the other countries to bring the project to a conclusion. Italy has blocked the project for many years. But Germany is still on the brakes.

fPaschal Donohoe has called an urgent special session for May 3rd. The Irish finance minister and head of the Eurogroup wants to get his EU counterparts to finally discuss a project that is making no progress – despite large parts of the financial industry urging progress: the completion of the European banking union. For Donohoe, who has not played a major role in the EU discussion about the economic consequences of the pandemic and the Ukraine war, it is the most important project of all. He is convinced that the banking union must be completed in order to prevent another financial crisis.

With the special session, Donohoe wants to increase the pressure. In December, the EU heads of state and government commissioned him – again – to present a timetable and work plan by June that should make the completion of the banking union possible. But the more the pressure increases, the greater the risk that the whole project will fail. “Until now, the whole thing was ‘just’ stuck. But if it is now seriously negotiated, the contradictions may become so great that we will have to bury the project entirely,” says an EU diplomat. The resistance from two different directions is obviously too great. On the one hand Italy is blocking the project – on the other Germany.