Renzi told the Italian senate this week that Italy will "veto any attempt to put a ceiling on the amount of government debt in banks’ portfolios, and we will show exemplary strength and consistency on this, without fail," the Financial Times reported.
The eurozone deposit insurance scheme aims to protect bank deposits through a central fund. Germany has said in the past that the scheme has the "wrong priorities and guidelines" and would spread risk around the Eurozone rather than reduce it. It has therefore been pushing for changes to the plan.
However, Renzi claimed that German banks have been responsible for recent market turmoil, the Financial Times said.
"The real issue with banks in Europe is a huge issue which has to do with Germany’s largest bank and its second-largest bank. Let me say that if some northern European lenders had kept their Italian government debt in 2011-2012, they would be earning much more," he said, according to the newspaper.
Jeroen Dijsselbloem, president of the Eurogroup, said that plans for the insurance scheme will continue. "I’m hearing some signals from different capitals but I’ve decided to ignore those signals because I believe we need to do it," he told the Financial Times.
EU legislation already protects all bank deposits up to €100,000 through national schemes. However, these "can be vulnerable to large local shocks", the Commission said in November, when the scheme was proposed.
"The Banking Union was established to underpin confidence in participating banks," the Commission said. The proposed European Deposit Insurance Scheme (EDIS) would strengthen that union, protect bank depositors, reinforce financial stability and "further reduce the link between banks and their sovereigns", it said.
The proposed scheme would be put in place in three stages, from re-insuring national deposit guarantee schemes to a co-insurance model with progressive increases in funding to EDIS, to a full European scheme by 2024.