European banking union in formation

Cutting the link between the sovereign debt problem and the banking issue should be a priority. A European resolution fund for banks can lead to a breakthrough for the current stalemate. Also European supervision and a deposit insurance system is crucial. 1) It is essential to establish rules forcing supervisors to intervene when specific crucial alarm levels are exceeded. The current proposals offer to much freedom to the national supervisors which massively failed in the current crisis. 2) With regards to the important section about adequate resolution mechanisms, we noticed that member states prefer to maintain privileged relations with “their” national banks. The current proposal for a European network of bank resolution funds need to be replaced by a real European resolution fund. 3) Instead of a deposit insurance system worth 0.5% of the outstanding deposits, we at least need to have a fund worth 1.5% of the deposits. 4) Guaranties have to be included to prevent the ECB from being politically influenced in its supervision mission.