The European Commission issued a statement this week saying it will accelerate the completion of the EU Banking Union, with finalisation of all parts by 2018. The goals of the Banking Union are to achieve a deeper financial integration and a more stable financial system with more resilience to shocks, while limiting the need for public risk sharing. Valdis Dombrovskis, vice-president for Financial Stability, Financial Services and Capital Markets Union said: “A complete Banking Union is essential for the future of the Economic and Monetary Union and for a financial system that supports jobs and growth.”

The six measures now being proposed to speed up the banking union are:

1. Quick agreement on the Banking Package

These proposals are to reduce risks and strengthen the resilience of EU banks.

2. Progress on the European Deposit Insurance Scheme

This guarantees citizens' deposits in the Banking Union at a central level, a vital missing element of the Banking Union.

3. A fiscal backstop to the Banking Union

A last resort common fiscal backstop would ensure the solidity of the system and make sure that the Single Resolution Fund (SRF) has sufficient resources to cope even with more than one major bank resolution. This was already committed to by member states in 2013.

4. Reduction of non-performing loans

This is a comprehensive package of measures to reduce the level of existing NPLs and prevent the build-up of NPLs in future, as agreed in the European Council on 11 July 2017. The package, which is due to be adopted in the spring 2018, will include:

• a blueprint for national asset management companies;
• legislative measures to further develop secondary markets for NPLs and enhance the ability of creditors to recover value from secured loans;
• a report exploring the possibility of a legislative proposal introducing statutory prudential backstops against under-provisioning of new NPLs; and
• a way forward to foster the transparency on NPLs in Europe.

5. Possible measures for Sovereign Bond-Backed Securities

These securities could help banks diversify their holdings of sovereign bonds. They could also be a new source of high-quality collateral for use in cross-border financial transactions.

6. Continuing to ensure high quality supervision

This proposes that large investment firms carrying out bank-like activities be considered credit institutions and be subject to bank supervision. This would ensure that prudential rules are applied consistently and that both large investment firms and credit institutions are subject to the same high level standards of supervision.