Euro countries agree on unified system of bank deposit guarantees
The ministers of finance of the 15 countries in the euro zone called for a uniform bank deposit guarantee in the European Union. The ministers met in Luxembourg on Monday.
The issue will be discussed on Tuesday at a meeting of the finance ministers of all 27 European Union member states. After that, the European Commission will take up a proposal for the details of the deposit protection agreement.
The move comes after a number of EU countries, including Ireland, Germany, Britain, Austria, Denmark, and Sweden, unilaterally increased their deposit insurance limits.
Finland had been very critical of the countries that increased their protection of bank deposits.
“Finnish banks are profitable and financially solid, and the liquidity situation is good”, said Heikki Solttila of the Ministry of Finance.
However, he emphasised that situations are changing fast, and that there is a readiness to change the policy if necessary. “The situation on the financial market is different now from what it was a week ago, for instance”, he said.
Prime Minister Matti Vanhanen (Centre) voiced criticism at the unilateral moves by some countries.
“A situation in which increases in deposit protection start moving like dominoes from one country to another is not something to be desired”, Vanhanen said on Monday.
After the meeting of the euro group on Monday evening, the European Economy Commissioner Joaquin Almunia said that the unilateral increases have had negative consequences.
“The euro group and the EU need to act together and in a united fashion”, Almunia said after the euro group’s meeting.
Jean-Claude Juncker, the chairman of the euro group, would not say if he thought that the deposit guarantee increase to be agreed upon by the member states will cover all deposits, or if a limit would be placed somewhere.
Prior to the meeting in Luxembourg, Vanhanen had said that the finnish government did not intend to follow the breakaway line taken by individual EU members. Protection here extends to deposits up to EUR 25,000.
Previously in HS International Edition:
Major Finnish investors seek to calm worries about financial crisis (30.9.2008)