Guest editorial by Helmut Siekmann on the weaknesses of the banking union ("Wirtschaftswoche")

The EU Commission is forging ahead with plans for a European deposit insurance scheme. In an editorial in the magazine "Wirtschaftswoche" Helmut Siekmann explains why this is a "bad plan at a bad time".

While most of banks in the north of Europe - apart from some exceptions - have stabilized after the big financial crisis, some institutes in Italy and France are developing into risks for the eurozone. As long as these countries have not restored their finances, they are using the European deposit insurance scheme and further steps to a banking union as a means of restructuring themselves at the expense of other countries, Siekmann argues.

Moreover, the planned financial equipment of the European fund is much too low to indeminfy investors in case a bank would be in payment difficulties. In Siekmanns view, the EU Commission does not respond to the question whether there is a guarantee regarding the capacity of the European protection schemes by a solvent sovereign institution. According to Siekmann, this is crucial for the population's trust.

Wirtschaftswoche: "Schlechter Plan zur schlechten Zeit"