BRUSSELS, Oct 5 (Reuters) - A European deposit insurance scheme should be introduced more gradually than initially planned, the European Commission is set to propose next week, in a bid to secure German support for a plan meant to increase financial stability in the euro zone.
In a draft document seen by Reuters, set to be published on Wednesday, the European Union executive arm will propose that the insurance scheme, known as EDIS, could initially provide only loans to support depositors of failing banks.
Only in a second phase the scheme would cover losses. This phase would start only when banks have sufficiently reduced their levels of bad loans, which remain still very high in some EU countries, like Italy, although they are decreasing.
Germany has long opposed the plan, fearing it could cost too much to its banks. (Reporting By Francesco Guarascio, editing by Jan Strupczewski)