Germany''s powerful finance minister Wolfgang Schaeuble on Saturday sharply criticised an EU proposal to create a common deposit-insurance system for eurozone banks. "We have to make sure not to put the cart before the horse," the influential minister said on the sidelines of an EU meeting of finance ministers. Since the worst days of the debt crisis, eurozone governments have radically overhauled supervision of lenders in the 19-nation currency bloc in order to prevent another financial implosion in Europe.
On Wednesday, EU commission head Jean-Claude Juncker said deposit insurance shared across the eurozone is "the missing part of our banking union," adding that it was "urgently needed" in view of the bank run seen in Greece this summer. But Schaeuble leads an influential group of eurozone ministers who want to keep their national protection systems separate from banks in other eurozone countries. Schaeuble said the priority was for the eurozone to complete the other two pillars of banking union: supervision and an agreed system to handle failed banks. "We must implement what we have already agreed to do. Opening the debate now is precisely getting things in the wrong order," he said. Juncker said he wanted the deposit scheme ready by the end of the year.
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