January 17, 2018 / 3:15 PM / a month ago

Germany demands clarity on risk reduction for banking union

BERLIN, Jan 17 (Reuters) - Euro zone countries must first agree on a clear plan to reduce risk in the banking sector before progress can be made toward completing a banking union in the currency bloc, Germany’s acting Finance Minister Peter Altmaier said on Wednesday.

Speaking during a joint news conference with Eurogroup chief Mario Centeno of Portugal, Altmaier added that the prospects on reaching agreement on risk reduction in the sector were good. But he declined to give a timeline.

Asked about when a joint deposit insurance scheme (EDIS), meant to cover insured savers would be in place, Altmaier said: “We first must reduce risks before there can be risk-sharing. Therefore, from our point of view and from today’s perspective, there cannot be a fixed date.”

He added: “In the last two Eurogroup meetings, we agreed to try to come to a common understanding over the next few weeks about what we mean by risk-reduction and what steps are needed for this.”

Centeno said the banking union was one of many pillars to shield the euro zone from future crisis. He said the currency bloc should not become a transfer union in which richer member states are asked to bankroll poorer peers. (Reporting by Joseph Nasr, Michael Nienaber and Gernot Heller; Editing by Alison Williams)

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