(Bloomberg) -- European Union leaders urged progress to strengthen banking union within the bloc as they played down any risk of turmoil on the day they were briefed by European Central Bank chief Christine Lagarde.

The turbulence in the financial sector fueled by the troubles of Credit Suisse Group AG and Silicon Valley Bank have underscored the need to bolster procedures for failing lenders while beefing up the protection of depositors.

“I’m confident that the actions we’ve taken in recent years have worked and are playing a very valuable role,” Eurogroup President Paschal Donohoe told Bloomberg Television’s Maria Tadeo in an interview in Brussels on Friday.

“The decisions that have been made regarding how we regulate our banking system, the decisions that have been made regarding how much capital we require our banks to hold: those decisions were right then and they are right now,” Donohoe said. He pledged to keep working on strengthening the banking union.

The bloc has been attempting to build a fully fledged banking union in the aftermath of the last financial crisis to strengthen the protection of depositors at a European level with a common insurance scheme and to bolster the resolution framework for failing banks with harmonized rules.

Deutsche Bank AG was at the center of another selloff in financial shares heading into the weekend. 

Lagarde told the EU leaders that the euro-area banking sector is strong despite the continued market turmoil, according to people familiar with the matter. She told them that the sector has held up because of the strong regulatory regime, and now it’s time to complete plans for a banking union.

Last June, euro-area members failed to agree on a calendar to conclude the banking union due to Germany’s opposition to the European Deposit Insurance Scheme and some capitals’ reluctance to limit the exposure to banks’ sovereign bond holdings. 

Instead, the Eurogroup agreed to progress on the areas where more consensus existed, including strengthening the common framework for bank crisis management and national deposit guarantee schemes. 

Proposals Soon

Donohoe told reporters earlier Friday he looked forward to the European Commission, the EU’s executive arm, making proposals soon “to implement the agreements that we made regarding how we can strengthen the deposit guarantee schemes in the face of any change that could happen.” He added: “We must when those commission proposals are brought forward act upon them.” 

Belgian Prime Minister Alexander De Croo said the European colleagues he has spoken to share the positive assessment of his country’s central bank. The lender’s assessment “is that for the moment the capital ratios are sufficient, liquidity is sufficient and that our banks and our financial system can continue” to meet financing needs.

“We do not see any risk for the moment and that’s the result of all the investments we did since 2008-2009 of very strict rules that we have,” De Croo said. “What we lack is this finalized banking union, this finalized capital markets union and I think that should only motivate us to continue doing that.”

German Chancellor Olaf Scholz said Thursday that the EU needs to tighten integration of its banking and finance sectors to bolster a transition to green technologies. The completion of the bloc’s efforts to create a single market for banks and capital is needed for the EU to maintain competitiveness, Scholz told lawmakers in Berlin.

--With assistance from Katharina Rosskopf, Daniel Hornak and Niclas Rolander.

(Updates with Donohoe interview, Lagarde from third paragraph)

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