This content is not available in your region

IMF's Lagarde urges euro zone to agree deposit insurance scheme

Access to the comments Comments
IMF's Lagarde urges euro zone to agree deposit insurance scheme
FILE PHOTO: International Monetary Fund (IMF) Managing Director Christine Lagarde attends the World Economic Forum (WEF) annual meeting in Davos, Switzerland, January 23, 2019. REUTERS/Arnd Wiegmann   -   Copyright  ARND WIEGMANN(Reuters)
Text size Aa Aa

PARIS (Reuters) – Euro zone countries must set aside national concerns about exposure to risks from other countries’ banks and build a shared bank deposit insurance system, said IMF chief Christine Lagarde.

Even though euro zone countries have shared a common currency for two decades, their financial systems remain fragmented, Lagarde told a conference at the Bank of France.

While euro zone banks now have a common regulatory supervisor and a single resolution scheme, many still choose to lend and invest locally rather than across borders, she added.

“It is clear what is left to be done: establish common deposit insurance. We can find ways to resolve our legitimate national concerns,” Lagarde said on Thursday.

“I urge euro area leaders to reignite the discussion, to negotiate in good faith and make the difficult compromises, to unlock the full potential of the banking union,” she added.

The European Deposit Insurance Scheme, or EDIS, is the last missing element from the euro zone’s banking union, which already includes a single supervisor and a resolution scheme.

Euro zone countries have struggled to reach an agreement because Germany, the Netherlands and other northern countries fear it could mean they would be left on the hook for the repayment of deposits in countries like Italy, Greece or Portugal, where banks are more burdened by bad loans.

(Reporting by Leigh Thomas; Editing by Sudip Kar-Gupta)

euronews provides breaking news articles from reuters as a service to its readers, but does not edit the articles it publishes. Articles appear on for a limited time.