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Schulz: deal on banking union a step forward, insufficient for Cyprus

European Parliament President Martin Schulz made the following statement after the European Parliament and the Council reached an agreement on legislation creating the foundations of the banking union.

"Today's agreement is a step towards building a banking union. We need such a union to restore economic confidence in Europe and break the vicious feedback loop between banks and national budgets. This vicious circle, where banking and sovereign debt mutually reinforce themselves, is largely responsible for recession, poverty and unemployment in many countries.

The creation of the Single Supervisory Mechanism goes some way towards a new, sound system of financial management that would shield us from crises in the future.

Yet the deeply distressing problems faced by Cyprus show how insufficient this step is in itself. We need the Single Resolution Mechanism which would deal with winding down failing banks and a deposit guarantee scheme. If we cannot have a single EU-wide deposit guarantee scheme for now, we should at least harmonise national schemes urgently.

I thank the Parliament's rapporteurs for a job well done in the negotiations. They have succeeded in improving the legislation by making the new mechanisms more transparent and democratically accountable."