ECB's Praet - deposit guarantee not key for bank union

FRANKFURT Mon Nov 19, 2012 2:34pm GMT

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FRANKFURT (Reuters) - Joint deposit guarantees are not a crucial issue for a banking union, European Central Bank Executive Board member Peter Praet said on Monday.

"Deposit guarantees are not a very key question ... deposit guarantee funds have never been enough for a systemic crisis," Praet, who has the economics portfolio among his tasks at the ECB, told the Euro Finance Week conference in Frankfurt.

Germany has resisted the idea of a Europe-wide deposit guarantee as part of a banking union, and ECB President Mario Draghi said earlier this month "financial union does not have to imply the pooling of deposit guarantee schemes".

After three years of piecemeal crisis-fighting, European countries are attempting to agree on a banking union to lay a cornerstone of wider economic integration and protect the euro.

The European Commission has proposed making the ECB the main supervisor for euro zone banks to prevent problems at lenders struggling with bad debts from sucking weak euro zone countries deeper into the debt crisis as they borrow to finance bailouts.

(Reporting by Sakari Suoninen and Paul Carrel)

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