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Options for reforming deposit protection schemes in the EU

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  • Gerhardt, Maria
  • Lannoo, Karel
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    Abstract

    With the financial crisis, citizens suddenly realized that different levels and forms of depositor protection co-existed in the EU, whereas they had been told for almost 20 years that a single market was in place. Current deposit insurance arrangements in Europe need to be changed, as they match neither market integration nor consumer expectations. But deposit insurance cannot be considered in isolation; it is part of the broader financial safety net and the crisis resolution tools for banks. Confronted with the question of what action should be taken to draw the right lessons from the crisis, practically the only option is an EU-wide fund, but policy-makers are still hesitant. Any intermediate solution will maintain too many distortions and imperfections and will not provide a coherent response to current challenges. This policy brief reviews current policy discussions on deposit insurance in the EU. It looks at the role of deposit insurance as part of the (European) financial safety net and examines the Commission’s recent proposal to amend the EU Directive on deposit guarantee schemes (DGS). The three options for a European DGS are assessed, followed by conclusions and recommendations.

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    File URL: http://www.ceps.eu/system/files/book/2011/03/ECRI%20Policy%20Brief%204.pdf
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    Bibliographic Info

    Paper provided by Centre for European Policy Studies in its series ECRI Papers with number 4339.

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    Length: 15 pages
    Date of creation: Mar 2011
    Date of revision:
    Handle: RePEc:eps:ecriwp:4339

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    1. Demirguc-Kunt, Asli & Kane, Edward J. & Laeven, Luc, 2006. "Deposit insurance design and implementation : policy lessons from research and practice," Policy Research Working Paper Series 3969, The World Bank.
    2. Beck, Thorsten & Laeven, Luc, 2006. "Resolution of failed banks by deposit insurers : cross-country evidence," Policy Research Working Paper Series 3920, The World Bank.
    3. G. G. Garcia, 1999. "Deposit Insurance," IMF Working Papers 99/54, International Monetary Fund.
    4. Robert A. Eisenbeis, 2004. "Agency problems and goal conflicts," Working Paper 2004-24, Federal Reserve Bank of Atlanta.
    5. Davide Furceri & Annabelle Mourougane, 2009. "Financial Crises: Past Lessons and Policy Implications," OECD Economics Department Working Papers 668, OECD Publishing.
    6. Charles Goodhart, 2008. "The Regulatory Response to the Financial Crisis," FMG Special Papers sp177, Financial Markets Group.
    7. Elena Loukoianova & Gianni De Nicoló & John H. Boyd, 2009. "Banking Crises and Crisis Dating," IMF Working Papers 09/141, International Monetary Fund.
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    Cited by:
    1. CLIPICI Emilia & FRANT Florin, 2013. "Considerations Concerning Guarantee Schemes," Anale. Seria Stiinte Economice. Timisoara, Faculty of Economics, Tibiscus University in Timisoara, vol. 0, pages 134-141, May.
    2. Schoenmaker, Dirk & Gros, Daniel, 2012. "A European Deposit Insurance and Resolution Fund," CEPS Papers 6918, Centre for European Policy Studies.
    3. Mario Sarcinelli, 2013. "The European Banking Union: Will It Be a True Union without Risk Sharing?," PSL Quarterly Review, Economia civile, vol. 66(265), pages 137-167.
    4. Franklin Allen & Elena Carletti & Agnese Leonello, 2011. "Deposit insurance and risk taking," Oxford Review of Economic Policy, Oxford University Press, vol. 27(3), pages 464-478.
    5. Schoenmaker, Dirk & Gros, Daniel, 2012. "A European Deposit Insurance and Resolution Fund - An Update," CEPS Papers 7276, Centre for European Policy Studies.

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