Hans-Werner Sinn was among the first to join an appeal against a mutualisation of bank debts in the Eurozone. Interestingly, once the appeal was made public, many press articles claimed that he was its initiator and author. Reacting to this, the Ifo Institute released a press statement on 18 July 2012 clarifying that the appeal had in fact been written by Prof Walter Krämer, of the Technical University Dortmund: Mr Sinn was on his way to the USA when the appeal was being prepared. Neither did he take part in the effort to gather signatories for the appeal.
The appeal was eventually signed by 279 German-speaking economists, mostly full professors. Parallel to this appeal, a largely similar one was initiated by Frank Heinemann, of the Technical University Berlin, and Gerhard Illing, of the LMU in Munich, which attracted, in addition to the 16 first signatoires, 220 signatories of various fields in economics. While this appeal also called for not mutualising bank debts, it placed stronger emphasis on the need to jointly regulate banks.
Hans-Werner Sinn and Walter Krämer made clear in a subsequent article in the Frankfurter Allgemeine Zeitung that they were by no means against a banking union exercising common regulation of banks, addressing the criticism voiced by politicians as well as opposing positions, or the article by Ulrich van Suntum.
Given that the positions of the different economic groups were much more closely aligned than reports by the press suggest, the main representatives of both groups released a joint statement in the so-called “Plenary of Economists”, which highlights the views shared by both sides. This statement was signed by 237 German speaking professors, including the above-mentioned individuals from both camps.
In their joint position, the authors call for deposit insurance schemes on a national level, but reject transnational risk distribution schemes.
In his article “The Perils of European Debt Insurance”, published in 2018, Hans-Werner Sinn draws parallels with the US Savings and Loan crisis of the 1980s and the crisis of Germany’s state-owned Landesbanken to show that collective liability schemes lead to the creation of zombie banks that take on debt cheaply and plough the money into high-risk investment opportunities. It follows that an expansive European deposit-insurance scheme would threaten stability in Europe and sow the seeds for the next banking crisis.