Cooperative banks play a key role in the German economy, acting as local and regional funding partners to support small and medium-sized enterprises. In turn, these SMEs form the backbone of the German economy. If the banks are to be able to fulfill this important role, they firstly require a regional presence with powers to make lending decisions at local level and, secondly, they need to enjoy a high level of trust. To achieve both of these, the cooperative banks operate within a decentralized network based on solidarity principles. For example, they operate their own, privately financed bank protection scheme that has been in place for 90 years to protect the banks’ solvency and is highly trusted by members and customers. 

“ECON’s proposal jeopardizes the functioning of our deposit protection scheme and thus weakens our cooperative banks,” states Kolak, who believes that making the resolution of even small banks the standard is the wrong approach. “The proposed CMDI reforms should be focused on the urgent problems relating to the resolution of large and systemically important banks as the existing processes have turned out to be very impractical,” she continues. Instead of offering solutions for these major problems, the CMDI proposal exacerbates the ‘too big to fail’ problem. “This proposal will force our regional banks to consolidate. Yet it is precisely these decentralized, regional structures that have proved to be particularly resilient during the crises of recent decades,” says Kolak. 

The BVR is therefore calling on all parties to revisit these highly questionable changes and to work together on identifying improvements that will ensure the stability and security of the banking sector in Europe without placing an unnecessary burden on established protection schemes.