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The EU Deposit Insurance Directive: Does One Size Fit All?

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  • Huizinga, Harry

Abstract

The EU deposit insurance directive requires member states to maintain deposit insurance with a minimum insured amount of 20,000 euros. This paper reviews the rationale for international coordination of deposit insurance policies. For international externalities of deposit insurance policies to exist, there has to be international ownership of either bank deposits or bank shares. On both counts, EU banking markets are currently highly integrated. The minimum coverage of 20,000 euros imposes costs if it forces some countries to 'overinsure' deposits. From a national perspective, the deposit insurance directive does not appear to result in overinsurance in the EU-15, but there may be overinsurance in several of the new member states.

Suggested Citation

  • Huizinga, Harry, 2005. "The EU Deposit Insurance Directive: Does One Size Fit All?," CEPR Discussion Papers 5277, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:5277
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    Cited by:

    1. Kane, Edward J., 2006. "Inadequacy of nation-based and VaR-based safety nets in the European Union," The North American Journal of Economics and Finance, Elsevier, vol. 17(3), pages 375-387, December.
    2. Santiago Carbo-Valverde & Edward Kane & Francisco Rodriguez-Fernandez, 2008. "Evidence of Differences in the Effectiveness of Safety-Net Management in European Union Countries," Journal of Financial Services Research, Springer;Western Finance Association, vol. 34(2), pages 151-176, December.

    More about this item

    Keywords

    deposit insurance; international coordination;

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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