such instrument is not accidental : it reflects the unwillingness of many european countries to consider the possibility that the taxpayers of country a may pay, even temporarily, for the crisis of a bank in country b. according to this view, banks, although now supervised and subject to resolution by european institutions, must ultimately remain a national matter. the single deposit guarantee scheme the second key pillar of the banking union ( the european deposit insurance scheme ) seems to be still a long way in the future. the last five presidents ’ report of june 2015 underlined the need to continue moving ahead in relation to the single deposit insurance, because without it the euro runs the risk of being unable to absorb generalised confidence shocks ; the report recalled that – in comparison to national systems – a common guarantee scheme is more likely to be neutral over time for public finances, because risks are more spread and contributions are levied on a wider range of intermediaries 4. the european commission recently made a proposal – submitted to ecofin last december – to change the srm regulation in order to create a european deposit insurance scheme ( edis ), fully funded by private resources provided by all banks in the euro area. the proposal was submitted for consideration to the council, which set up a special working group. the edis is intended to establish a mutual system of private deposit insurance based on the deposit insurance fund ( dif ), to which the already existing national funds would gradually transfer the resources collected by the participating banks. the scheme would guarantee the same protection in all the countries participating in the ssm ; it would increase confidence in the european banking system on a level playing field. the edis should be established in three stages. in the first one ( reinsurance, until 2019 ) the dif would cover up to 20 per cent of the financial requirement or the losses of national funds. in this stage the dif would provide assistance only after the national funds have used all the available resources ( both ex - ante contributions and ex - post ones, in case additional funding is needed ). in the second stage ( co - insurance, from 2020 to 2023 ) the share of the financial commitment and of the cost of the assistance borne by dif would gradually increase ( up to 80 per cent ) ; in this stage the intervention by the dif and by the national funds would occur in parallel. in the third and last stage ( full insurance, from 2024 ), the dif would provide all funding. thus, we

are talking about a scheme which does not envisage any public backstop, and has a very long transition. nonetheless such proposal has faced firm opposition from some countries ( among which germany, the netherlands and finland ). they call for the harmonisation of major national regulations – bankruptcy laws, collateral framework, tax rules, company law and consumer protection – before mutual guarantee schemes are even for an in - depth study of the five presidents ’ report, see i. visco, european union : progress or regress?, speech at the 50th anniversary conference of istituto affari internazionali, 13 november 2015. bis central bankers ’ speeches discussed ; and, above all, they call for the preliminary introduction of prudential requirements for banks ’ sovereign exposures. discussions seem to be deadlocked. a climate of mistrust still prevails along national borders. * * * let me sum up. the banking union original plan envisaged that if a european bank went into crisis, the first common funds to be used to save it should be private, but, if that were necessary to preserve financial stability, then also public funds should be used ; should the crisis not be resolved and the bank be wound up, deposits below a certain threshold should be guaranteed, again with common private funds, but, if need be, with public ones as well ; a unified approach to banking supervision at the european level would prevent suspicions of favouritism and moral hazard by national authorities. the single supervisory mechanism has been fully in place since a year and a half now. it is working, despite having been developed in a very short time and despite the objective coordination difficulties among authorities with different histories, traditions and practices. cooperation between the national and the central level, after some initial friction, is now smoother. the single resolution mechanism has only recently become fully operational and differs from the original project. it presents implementation issues and also risks for the systemic financial stability. the single deposit guarantee scheme is still missing and there are heated discussions about its design. therefore the banking union implemented so far is neither perfect nor complete. its difficulties are those of the entire european union. those who recognize its indispensable role and care about its fate must work with renewed determination to strengthen it. bis central bankers ’ speeches