The euro zone should introduce a single scheme to protect depositors across the region, the president of the European Central Bank said today.
Mario Draghi warned that failure to make such reforms had made the currency union vulnerable.
Mr Draghi said that such changes were needed to complete a banking union project that began with ECB supervision of the sector.
"In particular, deposits, which are the most widespread form of money, have to inspire the same level of confidence wherever they are located," Draghi told an audience in Frankfurt.
"When push comes to shove, depositors must be afforded similar protection wherever they are located," he added.
Meanwhile, the ECB also said today that the direct impact of China's economic slowdown on euro zone growth via trade will be modest, but the impact from indirect channels may be more .
China's economic growth dipped below 7% in the third quarter, its slowest since the global financial crisis, and Beijing has rolled out a flurry of measures to avert a sharper slowdown.
"Available estimates suggest that the direct and indirect trade effects from a 1 percentage point slowdown in Chinese real GDP are relatively muted, and amount to a decline of around 0.1 to 0.15 percentage point in euro area activity after two to three years," the ECB said in an economic bulletin.
But it also warned that China's slowdown will cut growth in emerging markets and heighten global uncertainty, which could then indirectly affect euro area household confidence, holding back consumption and investments decisions.
"Another possible channel for transmitting negative shocks to the euro area is confidence effects, where, for instance, capital outflows can be triggered by adverse confidence shocks, leading to a tightening of financial conditions in emerging markets and a further slowdown of euro area foreign demand," the ECB said.
Capital outflows from China could also weaken the Chinese currency, dragging down other emerging market currencies with it, the ECB added.
