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Yesterday’s informal dinner of the European Council discussed the growth agenda and the prospect for Eurobonds. But it also, for the first time, erred the idea of a supranational deposit guarantee scheme. This is something we had been advocating for a very long time but has taken a whole new sense of urgency with the acceleration of deposit attrition in a number of countries. The monthly data suggest nonetheless that “runs” on banks are still very localized and that they are largely concentrated in Greece and Ireland. However, the debate over a deposit guarantee (whose shape and form is still unclear) could be immensely helpful in reducing the risks of deposits flight in other fragile banking systems (Spain, Cyprus…). More importantly, this ought to set in motion other necessary elements of a banking union: a supranational resolution scheme and a real federal supervisory authority. 
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