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IMF calls for full EU banking union to counter crisis

Dealing with problems on a country by country basis not working, says IMF.

Image: Itsuo Inouye/AP/Press Association Images

THE IMF HAS urged the European Union’s governments to move towards a fully integrated banking union in order to stabilise the bloc’s financial sectors.

In its first overall assessment of the stability of the EU’s financial sector, the IMF said that the EU’s 27 country members still face great challenges ”with continuing banking and sovereign debt crises”, the IMF said. However, these could be resolved once a comprehensive region wide solution was pushed for and achieved rather than looking for solutions on a country by country basis.

“The crisis reveals that handling financial system problems at the national level has been costly, calling for a Europe-wide approach,” it said in its assessment of the European Union’s financial sector.

It praised the decision to set up a single bank supervisor (SSM) in the EU based on the European Central Bank, but said that more  needed to be done.

“The SSM is only an initial step toward an effective banking union — actions toward a single resolution authority with common backstops, a deposit guarantee scheme, and a single rule book, will also be essential,” the IMF said.

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