"The Lithuanian Presidency has contributed much to solving the remaining issues of the Banking Union. Last week, we have reached the agreement with the European Parliament on the Bank Recovery and Resolution Directive. A similar agreement on Deposit Guarantee Schemes is expected in the coming days. We have gone a long way in seeking agreement on the Single Resolution Mechanism. We already have the guidelines, but still are preparing for a long, intensive and constructive discussion. I hope it leads us to the positive outcome," said Rimantas Šadžius, Lithuanian Finance Minister and Chair of the ECOFIN Council.
In the ECOFIN on December 10, the Ministers defined the guidelines on various elements of the SRM. On the basis of those guidelines, the Lithuanian Presidency presented an updated compromise proposal to the ECOFIN Ministers to prepare for the continuation of their meeting on December 18.
The guidelines envisage agreement consisting of a draft regulation, based on the Commission proposal, and a decision to negotiate an intergovernmental agreement by March 1, 2014.
The intergovernmental agreement would include specific provisions on the single resolution fund. The Lithuanian Presidency proposed to finance the single resolution fund by bank levies raised nationally. It would initially consist of national compartments that would be gradually mutualised over ten years.
The SRM would enter into force on January 1, 2015.
The Council will also consider a draft statement on the design of a backstop to the single resolution fund.
The European Council has requested to reach the Agreement on the Single Resolution Mechanism in the Council until the end of this year.
Additional information
Bank Recovery and Resolution Directive (BRRD) and Deposit Guarantee Schemes (DGS) are the components of Banking Union. BRRD establishes a framework for the recovery and resolution of banks and investment companies while safeguarding the taxpayers' money. The aim of the DGS Directive is to improve the protection of depositors' savings by ensuring fast pay-outs to depositors and that each member state would have sufficient funds in the scheme.
