Mind the Banking Gap: Why the EU must deliver EDIS¹ now

Europe’s Banking Union was launched with bold ambition but, over a decade later, its construction remains incomplete. Two pillars are in place. The third, arguably the most symbolic and politically sensitive – EDIS, a fully mutualised deposit insurance scheme – remains unfinished. With the CMDI² review now finalised, and with the current EU competitiveness and growth focus, the time has come to push forward the creation of a real Single Market. We cannot have a truly Single Market without a complete Banking Union. What’s at stake isn’t just institutional balance, but the trust and integration needed to develop all the potential of the Economic and Monetary Union. 

A completed Banking Union would not only support financial stability, it would redefine the euro area as a truly integrated market. But without EDIS, fragmentation persists. Depositors in one Member State may perceive more or less protection than in another due to the lack of political will to finalise the framework. Equal protection for all European depositors, backed by a common funding mechanism, is essential. EDIS is not just an insurance tool, it is the tool to ensure a free flow of funding and liquidity across countries to finance European businesses and people’s needs. It would ultimately level the playing field and facilitate cross-border mergers. 

First, we need to finalise EDIS. The CMDI reform was a welcome step, but it left the third pillar unaddressed. Now that the legislative dust has settled, the Commission should put the Banking Union back at the top of the political agenda and bring forward a concrete proposal. We support the inclusion of EDIS in the Savings and Investments Union roadmap, but this cannot remain a long-term aspiration. A well-designed EDIS would eliminate fragmentation in deposit protection and enhance trust in the resolution framework, which is key to reducing ring-fencing and restoring true cross-border integration. It would also reinforce the credibility of Europe’s financial safety net and the EU’s political cohesion.

Second, the amended ESM³ Treaty must be ratified. This is essential to activate the backstop to the Single Resolution Fund, and to give authorities confidence that resolution funding will be available in a systemic crisis. The political process to ratify the treaty has dragged on for too long. Member States must show commitment to common solutions and give the Banking Union the institutional credibility it deserves. Completing the ratification would send a strong signal of unity and readiness to address future risks collectively.

Third, we must address the missing piece in resolution: liquidity. No resolution plan can succeed without access to liquidity. A credible, publicly backed liquidity-in-resolution tool – perhaps provided by the ECB – must be created. The ability of resolved entities to meet short-term obligations, protect critical functions, and maintain confidence hinges on this tool. Resolution is about more than capital buffers; it is about confidence in execution and stability in motion. This element is still overlooked and must move from ambition to implementation. Other jurisdictions have it in place.

In parallel, the debate on capital and liquidity waivers must move forward. A truly integrated Banking Union requires that cross-border groups be able to manage capital and liquidity holistically. This conversation must be tied to the broader discussions on sovereign exposures. Risk reduction and risk sharing must proceed in tandem, and EDIS is the bridge between them. Failing to align these debates risks perpetuating division and weakening confidence in the framework’s future.

European authorities have been clear: completing the Banking Union is no longer a technical debate, it is a test of political resolve. Progress will require compromises. But further delay only fuels fragmentation and undermines the credibility of what has been built so far. Time is not neutral in this context. The longer the gaps persist, the greater the uncertainty for banks, investors, and citizens. This is critical for the competitiveness of the European banks and to allow the single market to become a source of growth of European companies and for our citizens. 

The Banking Union must not become a monument to partial integration. We fully support its completion, starting with a renewed and binding commitment to EDIS, underpinned by a ratified ESM Treaty and a credible liquidity backstop. Member States must act decisively, setting aside domestic hesitation and recognising that a true union requires not only shared rules, but shared trust and political maturity. The path forward is clear, what remains is to walk it together.

1. European Deposit Insurance Scheme
2. Crisis Management and Deposit Insurance
3. European Stability Mechanism