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A European Deposit Insurance and Resolution Fund - An Update

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  • Schoenmaker, Dirk
  • Gros, Daniel

Abstract

Cross-border firms supply goods and services throughout Europe and cross-border banks facilitate the cross-border traffic by persons and firms. European banks are thus an integral part of the internal market. Yet cross-border banking is not stable in the current institutional setting as national authorities focus on preserving the national parts of a cross-border bank and the integrated value of a bank is neglected. European banks therefore need a European safety net, which is a precondition for putting the supervisory framework on a European footing. This Policy Brief first shows the overall architecture for a banking union in the euro area and sketches the basic building blocks of such a safety net. Next, it provides a sketch of a prospective European Deposit Insurance and Resolution Fund and outlines how one could structure a gradual transition from the national deposit insurance funds to the new European fund. Finally, it calculates that a European Deposit Insurance Fund would amount to about €30-50 billion for the 75 euro area banks that were subject to the EBA stress tests. This Fund could be created over a period of time through risk-based deposit insurance premiums levied on these banks. Once up and running, the Fund would then turn into a European Deposit Insurance and Resolution Fund to also deal with the resolution of one or more of these European banks.

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File URL: http://www.ceps.eu/system/files/book/2012/09/PB283%20DG%20%2526%20DS%20Deposit%20Insurance.pdf
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Bibliographic Info

Paper provided by Centre for European Policy Studies in its series CEPS Papers with number 7276.

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Length: 12 pages
Date of creation: Sep 2012
Date of revision:
Handle: RePEc:eps:cepswp:7276

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  1. André Sapir & Benedicta Marzinotto & Guntram Wolff, 2011. "What Kind of Fiscal Union ?," ULB Institutional Repository 2013/174293, ULB -- Universite Libre de Bruxelles.
  2. Jean Dermine, 2000. "Bank Mergers in Europe: The Public Policy Issues," Journal of Common Market Studies, Wiley Blackwell, vol. 38(3), pages 409-425, 09.
  3. Hertig Gerard & Lee Ruben & McCahery Joseph A., 2010. "Empowering the ECB to Supervise Banks: A Choice-Based Approach," European Company and Financial Law Review, De Gruyter, vol. 7(2), pages 171-215, January.
  4. Schoenmaker, Dirk & Gros, Daniel, 2012. "A European Deposit Insurance and Resolution Fund," CEPS Papers 6918, Centre for European Policy Studies.
  5. Schoenmaker, Dirk, 2013. "Governance of International Banking: The Financial Trilemma," OUP Catalogue, Oxford University Press, number 9780199971596, October.
  6. Keynote Speech by Maurice Obstfeld, 2011. "International Liquidity: The Fiscal Dimension," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 29, pages 33-48, November.
  7. María J. Nieto & Larry D. Wall, 2006. "Preconditions for a successful implementation of supervisors' prompt corrective action: Is there a case for a banking standard in the European Union?," Working Paper 2006-27, Federal Reserve Bank of Atlanta.
  8. Repullo, Rafael, 2000. "Who Should Act as Lender of Last Resort? An Incomplete Contracts Model," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 32(3), pages 580-605, August.
  9. Gerhardt, Maria & Lannoo, Karel, 2011. "Options for reforming deposit protection schemes in the EU," ECRI Papers 4339, Centre for European Policy Studies.
  10. Charles Goodhart & Dirk Schoenmaker, 2009. "Fiscal Burden Sharing in Cross-Border Banking Crises," International Journal of Central Banking, International Journal of Central Banking, vol. 5(1), pages 141-165, March.
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Cited by:
  1. Marius A. Zoican & Lucyna A. Górnycka, 2013. "Banking Unions: Distorted Incentives and Efficient Bank Resolution," Tinbergen Institute Discussion Papers 13-184/VI, Tinbergen Institute.
  2. Elliott, Douglas J., 2014. "Lessons for Asia from Europe’s History with Banking Integration," ADBI Working Papers 462, Asian Development Bank Institute.
  3. Zbyněk Revenda, 2013. "Theoretical and Economic Aspects of Deposit Insurance," Politická ekonomie, University of Economics, Prague, vol. 2013(2), pages 149-170.
  4. Hans Geeroms & Pawel Karbownik, 2014. "A Monetary Union requires a Banking Union," Bruges European Economic Policy Briefings 33, European Economic Studies Department, College of Europe.
  5. Gros, Daniel, 2013. "Principles of a Two-Tier European Deposit (Re-)Insurance System," CEPS Papers 7958, Centre for European Policy Studies.
  6. Marek Dabrowski, 2012. "Fiscal and Monetary Policy Determinants of the Eurozone Crisis and its Resolution," CASE Network Studies and Analyses 443, CASE-Center for Social and Economic Research.

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