Woccu welcomes efforts to tailor EU rules for credit unions

‘Where appropriate frameworks are adopted, credit unions are remarkably successful in providing inclusive economic growth for their citizens’

Representatives from credit unions have this month met members of the European Parliament (MEPs) to discuss key upcoming regulatory items.

The European Network of Credit Unions (ENCU) includes eight European credit unions associations and the World Council of Credit Unions (Woccu), who use the platform to engage with European institutions and exchange best practices.

“Providing appropriate regulatory frameworks that recognise the unique co-operative structure of credit unions is essential to allowing them to continue to provide underserved and rural areas that are in desperate need of access to responsible credit,” MEP Billy Kelleher (Ireland), co-chair of the European Parliament Credit Union Interest Group said in a Woccu press statement.

The discussion focused on the European Deposit Insurance Scheme (EDIS), which covers bank deposits in the eurozone. A system of national deposit guarantee schemes (DGS) already ensures that all deposits up to €100,000 (£85,000) are protected through national DGS all over the EU. However, according to the European Commission, the EDIS would provide a stronger and more uniform degree of insurance cover in the euro area. 

Under the EDIS, when banks in the banking union are placed into insolvency or in resolution and it is necessary to pay out deposits or to finance their transfer to another bank, the national DGS and EDIS can intervene. EDIS would apply to deposits below €100,000 of all banks in the banking union.

A new scheme at the EU level might bring with it additional reporting and additional regulatory oversight that could place an extra burden on credit unions. The sector would like to see new legislation applied as a supplementary “back-stop” to already existing national deposit guarantee schemes that currently exist as opposed to a full replacement of existing schemes.

“We applaud the EU’s efforts so far in supporting the credit union system. We note that globally, where appropriate frameworks are adopted, credit unions are remarkably successful in providing inclusive economic growth for their citizens. We hope the EU continues on its current path of tailoring regulations appropriate for credit unions,” said Woccu vice president Andrew Price.

The meeting also featured representatives of the Irish League of Credit Unions (ILCU), National Association of Co-operative Savings and Credit Unions (NACSCU) of Poland, Estonian Union of Credit Cooperatives (EUCC), Albanian Savings and Credit Association (SCA), North Macedonia’s FULM Savings House, the Latvian Co-operative Credit Union Association (LKKSS), and the Dutch Association of Cooperating Credit Unions (VSK).