European Deposit Insurance Scheme - the Final Step Towards a Harmonized Banking Union? PDF Download
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Author: Julian Kopf
Publisher:
ISBN:
Category :
Languages : en
Pages : 42
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Book Description
Author: Julian Kopf
Publisher:
ISBN:
Category :
Languages : en
Pages : 42
Get Book Here
Book Description
Author: International Monetary Fund. Monetary and Capital Markets Department
Publisher: International Monetary Fund
ISBN: 1475516576
Category : Business & Economics
Languages : en
Pages : 31
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Book Description
This article is an overview of existing deposit insurance in the European Union. There are various national deposit schemes that form the source of insurance. The schemes come up with various coverage, contributions, and fund sizes. The recent financial crisis has brought about a change in the coverage system. The main intention of this insurance is to enhance financial stability. The role of this insurance varies both within the EU and worldwide. This insurance is important to sustain financial integration and internal functioning.
Author: Daniel Gros
Publisher:
ISBN:
Category : Banks and banking, Central
Languages : en
Pages : 7
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Book Description
It is generally agreed that a Banking Union should have common or 'single' institutions responsible for carrying out three basic functions: supervision, resolution and deposit insurance. So far, however, agreement has been reached in the EU on only the first two functions. The Commission has now presented its proposal on how to complete the Banking Union with a European Deposit Insurance Scheme (EDIS). It is an innovative and courageous proposal. It is courageous because it will clearly be very controversial in a number of member states (especially Germany) and it is innovative because it proposes a three-stage process, starting with re-insurance, then switching to co-insurance and finally to full direct insurance of deposits via a 'single' Deposit Insurance Fund (DIF). This final stage should be reached in 2024, which is also the date at which the Single Resolution Fund (SRF) will become the only source of financing for bank resolution. The Commission's proposal calls for integrating the decision-making for EDIS into the decisionmaking entity for the SRF, namely the existing Single Resolution Board (SRB). This makes sense if one views resolution and deposit insurance as two highly interlinked dimensions of dealing with banks in trouble. In this view the two dimensions should be bundled into one institution--and one suspects that over time the two funds (the SRF and the DIF) could be merged into one. This Policy Brief argues that re-insurance should not be considered as a transitory phase, but could also provide a solution for the long run. 'Experience rating' could be used to ensure a proper pricing of risk and to protect the interests of the depositors in countries with safer banking systems. Moreover, EDIS should have a decision-making structure separate from and independent of the SRM, since it has mainly a macroeconomic function.
Author: Rishi Goyal
Publisher: International Monetary Fund
ISBN: 1475569823
Category : Business & Economics
Languages : en
Pages : 31
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Book Description
The SDN elaborates the case for, and the design of, a banking union for the euro area. It discusses the benefits and costs of a banking union, presents a steady state view of the banking union, elaborates difficult transition issues, and briefly discusses broader EU issues. As such, it assesses current plans and provides advice. It is accompanied by three background technical notes that analyze in depth the various elements of the banking union: a single supervisory framework; a single resolution and common safety net; and urgent issues related to repair of weak banks in Europe.
Author: Great Britain: Parliament: House of Lords: European Union Committee
Publisher: The Stationery Office
ISBN: 9780108493935
Category : Business & Economics
Languages : en
Pages : 74
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Book Description
A European banking union is urgently required in order to restore credibility and stability to the euro area banking system, and to break the vicious cycle between banks and sovereign states. The UK has made clear that it will not participate in a banking union creating a significant risk that the UK will be marginalised as banking union participants move towards closer integration. The Government must do all in their power to ensure that London's pre-eminence as a financial market is not imperilled and that the integrity of the single market is retained. The original banking union proposals set out a three-pronged approach: a Single Supervisory Mechanism, a common resolution mechanism and a common deposit insurance scheme. The Committee regrets that this coherent model has already been undermined by political pressure, led by Germany. Banking union requires all three of these elements if it is to be effective. However the publication of the Single Supervisory Mechanism proposals is welcomed as a significant first step towards banking union. It is agreed that the European Central Bank be given ultimate supervisory responsibility for every euro area bank but the concentration of so much power in one institution means that powerful safeguards must be put in place. The Commission's original proposals do not go nearly far enough to meet these concerns. It is highly uncertain whether these safeguards can be put in place within existing treaty constraints. European legislators need to decide whether treaty change is a price they are willing to pay in order to create a viable banking union
Author: Mr. Atilla Arda
Publisher: International Monetary Fund
ISBN: 1616358076
Category : Business & Economics
Languages : en
Pages : 27
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Book Description
This paper argues that in the European Union (EU) deposit insurance funds are too difficult to use in bank resolution and too easy to use outside resolution. The paper proposes reforms in three areas for the effective management of bank failures of small and medium-sized banks in the European Union: making resolution the norm for dealing with failing banks; establishing a common DIS for the European Union; and increasing funding and backstops for deposit insurance while removing constraints on their use for resolution measures. Without these changes, the European Union will continue to be challenged by banks that are too small for resolution and too large for liquidation.
Author:
Publisher:
ISBN: 9789279633294
Category :
Languages : en
Pages : 8
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Book Description
As stated in the Five Presidents' Report, completing the Banking Union is a fundamental step towards making the Economic and Monetary Union (EMU) more sustainable and enabling it to deliver a better life for EU citizens. The overarching goal of the Banking Union is to break the link between a Member State's banks and its taxpayers, preventing a situation in which a failing banking sector endangers the sustainability of public debt or where the unsustainability of public debt endangers an otherwise solvent banking sector. The Banking Union was devised to tackle the former aspect of this link. The current Banking Union setup, however, retains a substantial weakness: making sure citizens' deposits in banks are safe was a key element of crisis management - and overall a successful one - but as long as these Deposit Guarantee Schemes (DGSs) remain national, Member States' budgets continue to be exposed to risks in their banking sectors. A common deposit insurance scheme, on the other hand, would increase resilience against future crises. Consequently, the Five Presidents' Report proposed setting up a European Deposit Insurance Scheme (EDIS) as the third pillar of a fully-fledged Banking Union, alongside bank supervision and resolution.
Author: Thomas F. Huertas
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
To complete banking union, there should be a single European deposit insurance scheme (EDIS) alongside the single supervisor and the single resolution authority. This would ensure uniformity across the Eurozone and facilitate the removal of barriers to the mobility of liquidity and capital within the single market. That in turn would promote efficiency in the banking sector and in the economy at large - just at the time that the EU needs to boost growth in order to remain competitive with the US and China. The EDIS promise to promptly reimburse insured deposits at a failed bank in the Eurozone should be unconditional. But who will stand behind that commitment? Who is the "E" in EDIS? Is its promise credible, even in a crisis? If a deposit guarantee scheme fails to deliver what people expect, panic would very likely erupt. Instead of strengthening financial stability, deposit insurance could destroy it. Yet this is the risk that current proposals pose. They create the impression that there will be a single deposit guarantee scheme. There will not. Instead, there will be a complex set of liquidity and reinsurance arrangements among Member State schemes. These defects need to be remedied. To do so, we propose creating a European Deposit Insurance Corporation (EDIC) alongside national schemes. For banks that meet EDIC's strict entry criteria and decide to become members, EDIC will promise to reimburse promptly - in the event the member bank fails - 100 cents on the euro in euro for each euro of insured deposits, regardless of the Eurozone Member State in which the bank is headquartered. In effect, the single deposit guarantee scheme would be created via migration to EDIC rather than mutualisation of existing schemes. This would increase the mobility of capital and liquidity and lead to a convergence of interest rates across the Eurozone. That in turn will improve the effectiveness of monetary policy, foster integration and promote growth.
Author:
Publisher:
ISBN: 9789279988752
Category :
Languages : en
Pages :
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Book Description
In the European Union, the Deposit Guarantee Schemes Directive adopted in 2014 sets out rules and procedures to ensure depositor protection and is a key step towards harmonisation of deposit insurance in the European Union. It contains 22 national options and discretions (NODs) which Member States may apply to reflect specific national circumstances. The purpose of this study is to assess the respective national implementations of the NODs, including their practical impact on depositor protection, and to propose policy recommendations regarding their possible treatment under a reviewed DGSD or the European Deposit Insurance Scheme, under the assumption that the latter would take the form of a full insurance scheme. The analysis of the NODs is based on extensive surveys and interviews with representatives of national deposit guarantee schemes and authorities, including national competent authorities, central banks, Ministries of Finance, and banks. Based on the above analysis of the NODs, this study proposes alternative approaches for 12 NODs and full harmonisation for 3 NODs. It also recommends that 2 NODs could be retained in their current form while 5 NODs could be eliminated.
Author:
Publisher:
ISBN: 9789276126058
Category :
Languages : en
Pages :
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Book Description
Deposit insurance protects deposits and discourages depositors from bank runs. The strength of a deposit guarantee scheme (DGS) is primarily determined by the relative strength of its member institutions (mostly banks), the level of available financial means and the guarantor. It follows the principle that banks, participating in a DGS, and not taxpayers, should pay for bank failures. In the European Union, deposit insurance has been harmonised over the past two decades. The current rules and procedures on depositor protection are set out in the Deposit Guarantee Schemes Directive (DGSD) adopted in 2014, which strengthened depositor protection by requiring faster pay-outs, more robust funding, including a minimum target level for ex ante risk-based contributions, and increased information disclosure. Deposit insurance is therefore organised at national level and guaranteed by national governments, which are required to contribute when the funds of national DGSs are insufficient. In November 2015, the Commission proposed to set up a European deposit insurance scheme (EDIS) for bank deposits in the euro area as the third pillar of the Banking Union. Negotiations on the EDIS proposal are still ongoing. The DGSD contains about 22 national options and discretions (NODs), which may be applied on the basis of national circumstances, and their relevance under EDIS was frequently addressed in the context of the negotiations on EDIS in the European Parliament and the Council. In this context, the purpose of the study is to provide an overview of the current use of NODs in the Member States and contribute to the discussion regarding their treatment under EDIS, by formulating policy recommendations, including in view of the impact on EDIS in terms of financial exposure and administrative burden.
