The European Parliament’s committee on economic affairs today adopted a report on the European Deposit Insurance Scheme, the third pillar of the European banking union designed to protect all deposits below €100,000 across the euro zone.

The Socialists and Democrats welcome today’s vote that breaks a nine-year deadlock over this essential but controversial file. The Parliament's committee has done its job; the ball is now in the court of EU member states. They should not waste another decade, urge the S&Ds.

The European Deposit Insurance Scheme (EDIS) was proposed by the European Commission in 2015 to complement the first and the second pillar of the banking union – the Single Supervisory Mechanism and the Single Resolution Mechanism respectively.

The banking union was the EU’s response to the euro crisis that over a decade ago threatened the existence of the single currency. The plan was to restore trust in banks by ensuring that taxpayers’ money would no longer be used for rescuing failing banks.

While the common supervision and insolvency resolution systems were set up relatively quickly, the common protection of deposits has proven to be much more demanding, with the challenge of striking a delicate balance between debt reduction and debt mutualisation at the core of the debate.

Jonás Fernández, S&D spokesperson on economic affairs and negotiator on the European Deposit Insurance Scheme, said:

“The adoption of the report on EDIS by the committee on economic affairs is one of the most positive achievements of this mandate. With today's vote, we have overcome a nine-year blockade by right-wing parties that has prevented the completion of the banking union.

“The agreement contains solutions that are key for the Socialists and Democrats. First, it defines that – in the first phase – EDIS will provide liquidity to institutions in need when national funds are about to run out.

“Secondly, it establishes an initial four-year phase when the current resources of the national funds will be migrated to the European fund, bringing the European national liability to 50%. In addition, during that period, the amounts transferred to the European fund will be at the disposal of national insurers at no additional cost and in case more resources are needed, they will come from the European fund.

“Thirdly, the agreement avoids reinsuring national insurers, so that the fund will be fed by the banks themselves and not by contributions from national insurers. This detail is crucial, as it will allow EDIS to continue to evolve towards a mutualised loss-absorbing fund. Along these lines, after four years, the Commission will be obliged to evaluate the operability of EDIS in order to present a new legislative proposal that will allow progress towards the second phase of EDIS.

“This is, therefore, a key achievement. Attention must now turn to EU member states. They must unblock the negotiations on this file as soon as possible, just as the Parliament has done. At stake is the credibility of one of the most useful tools we have put in place after the financial crisis – the banking union. Although, with more delay than we would have liked, the Parliament's committee on economic affairs has responded. Let us hope that EU member states do not need another 10 years to follow suit.”