During a press conference this week, Valdis Dombrovskis, Vice President of the European Commission, informed among other that the currently existing national deposit insurance schemes - according to a proposal by the European Commission – shall be supplemented by a system based on reinsurance. A respective legislative proposal will be presented before the end of 2015.

In general, the deposit insurance scheme increases the trust of investors in banks and is to prevent the risk of a bank run. Currently, the Member States of the European Union are obliged to safeguard the bank deposits of citizens up to a limit of EUR 100,000 Euro per bank. The relevant Directive (based on the Deposit Guarantee Schemes Directive adopted in 1994 and amended in 2009) was adopted in 2014 and had to be implemented in national law by the Member States by 3 July 2015.

Apart from Austria, also Bulgaria, Denmark, Germany, Croatia, Latvia, Hungary, Portugal, Finland and the United Kingdom have implemented these measures. The Commission is now taking further steps against those states, which have not yet fully implemented the Directive.

In most cases, banks and national governments of the European area are very closely linked - banks act normally as the principal creditors of their own state. The most recent crisis illustrated this at times disastrous connection between national budgets and domestic banks.

The current attempt shall improve existing deposit guarantee schemes by increasing investor protection throughout Europe and by creating the same conditions for banks within the Single Market.

Now we have to wait for the exact contents of the legislative proposal, which has been held out in prospect by the end of 2015.

Further Information:

Press release of the European Commission