A reform of the CMDI framework that supports completion of the Banking Union

Abstract

This study, prepared at the request of the ECON Committee of the European Parliament, analyses the key elements for the review of the existing EU bank crisis management and deposit insurance (CMDI) framework, including the recent (April 2023) legislative proposals tabled by the Commission, and the need to reach political consensus on the creation of a European Deposit Insurance Scheme (EDIS) and a European Deposit Insurance Fund (EDIf). It is structured in four Sections.

Section 1 briefly presents the three pillars of the Banking Union (BU) and of the underlying single rulebook; discusses the elements of the uncompleted (unfinished) agenda, including the state of play in relation to the creation of the EDIS/EDIF and the harmonisation of rules on the winding-up of credit institutions (which are of primary importance in the context of this study); and then focuses on the recent proposals for amending the legislative acts relating to the CMDI framework in the BU (and the EU as a whole).

Section 2 discusses first in detail the options in relation to the parallel review of the CMDI framework and the creation of the EDIS/EDIF and then presents the positions taken in that respect by the European Parliament; the Commission in its 2021 consultative document; the Eurogroup in its Statement of 16 June 2022; the European Central Bank (ECB) and the Single Resolution Board (SRB); and the Commission (again) in its April 2023 legislative package.

The following Section 3 analyses in some detail the key elements pertaining to the review of the CMDI framework, and, in particular, those on the provisions of this framework which govern measures before the failure of credit institutions, and those on its provisions which govern selected aspects relating to resolution actions and insolvency proceedings. In all cases, the relevant legal framework and the discussions among EU institutions and agencies up to the Commission’s legislative proposals of April 2023 are presented and analysed (as appropriate) before discussing the key relevant provisions of the latter.

Section 4 contains finally the concluding remarks and assessments, including the author’s views (mainly) on the unfinished agenda relating to the BU.

JEL Classification: E50, E53, E58, G01, G21, G28, G33, K23, K33, N20, N24