For Volker Wieland time is not yet ripe for European deposit insurance scheme ("Börsen-Zeitung")

Volker Wieland has warned against a European deposit insurance scheme (EDIS) or a EU common budget. "Time is absolutely not yet ripe for a European deposit insurance scheme," he said in an interview with the German financial daily "Börsen-Zeitung". Regarding the proposal of the introduction of so-called Sovereign Bond-Backed Securities (SBBS) or European Safe Bonds (ESBies) he is also skeptical. Instead, he admonished to strengthen national responsibility.

In Wieland's opinion, new instruments for a fiscal stabilization of the economy are not necessary. To Wieland, the discussion about it seems excessive. "If a state runs the risk of losing market access, there already exists the ESM".

Regarding SBBS or ESBies, Wieland sounded a note of caution. "I don't think they would help much," he said. Instead, ESBies could open the door towards euro bonds.

According to Wieland, it is necessary to solve the problem of non-performing loans (NPL) before implementing EDIS. The level of NPL differs extremely throughout the euro area.

For Wieland, a decisive factor on the way to banking union is to abolish the privileges for sovereign exposures  in banking regulation and to introduce regulatory limits for large loans.

 

The interview is part of a double interview with Lorenzo Bini Smaghi in Börsen-Zeitung (€):
"Nein, die Krise kam nicht über uns wie ein Erdbeben" (only in German)