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Options for reforming deposit protection schemes in the EU

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  • Gerhardt, Maria
  • Lannoo, Karel

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.

Suggested Citation

  • Gerhardt, Maria & Lannoo, Karel, 2011. "Options for reforming deposit protection schemes in the EU," ECRI Papers 4339, Centre for European Policy Studies.
  • Handle: RePEc:eps:ecriwp:4339
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    File URL: http://www.ceps.eu/system/files/book/2011/03/ECRI%20Policy%20Brief%204.pdf
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    References listed on IDEAS

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    Cited by:

    1. Schoenmaker, Dirk & Gros, Daniel, 2012. "A European Deposit Insurance and Resolution Fund," CEPS Papers 6918, Centre for European Policy Studies.
    2. International Association of Deposit Insurers, 2012. "Enhanced Guidance for Effective Deposit Insurance Systems: Reimbursement Systems and Processes," IADI Guidance Papers 12-12, International Association of Deposit Insurers.
    3. International Association of Deposit Insurers, 2012. "Handling of Systemic Crises," IADI Research Papers 12-10, International Association of Deposit Insurers.
    4. A. Michael Andrews, 2014. "The role of deposit insurance in financial stability: issues and options in the ASEAN+3," Chapters, in: Iwan J. Azis & Hyun S. Shin (ed.), Global Shock, Risks, and Asian Financial Reform, chapter 11, pages 416-463, Edward Elgar Publishing.
    5. Schoenmaker, Dirk & Gros, Daniel, 2012. "A European Deposit Insurance and Resolution Fund - An Update," CEPS Papers 7684, Centre for European Policy Studies.
    6. Aida Barkauskaite & Ausrine Lakstutiene & Justyna Witkowska, 2018. "Measurement of Systemic Risk in a Common European Union Risk-Based Deposit Insurance System: Formal Necessity or Value-Adding Process?," Risks, MDPI, vol. 6(4), pages 1-21, December.
    7. 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.
    8. 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.
    9. Franklin Allen & Elena Carletti & Agnese Leonello, 2011. "Deposit insurance and risk taking," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 27(3), pages 464-478.
    10. 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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