The European Deposit Insurance Scheme

Chapter 13 considers that the Banking Union cannot fully be realized without a single deposit insurance scheme - that is a uniform guarantee for bank depositors across the EMU. As the author explains, however, EDIS has not yet been accomplished as the matter remains complex and politically charged. The controversy is clear: countries with (possibly) more financially stable banks do not want to mutualize risk before banks in other countries have strengthened their solidity; conversely a currency union requires credible and similarly effective deposit insurance in the entire area. A single and well-designed insurance scheme would also increase competition as depositors might shop across borders more freely and would contribute to decoupling the correlation between sovereign and bank risks. Integrated, efficient and effective capital markets are equally essential for EU and, especially after Brexit, uncertainties concerning this area abound. For sure, the integration of Capital Markets started before the development of a true Banking Union, and is now relatively advanced, even if national barriers are far from having been entirely abolished.