Common European deposit insurance scheme Banking supervision in the European Union

The recast Directive 2014/49/EU of the European Parliament and of the Council of 14 April further harmonises the requirements for national deposit guarantee systems (DGSs). All EU member states are now obliged to establish bank-financed deposit guarantee funds, thus providing coverage for bank deposits up to the amount of €100,000, should a compensation event occur. Germany already meets this requirement through its pre-existing statutory compensation schemes.

Under the Directive, DGSs are required to put aside financial means equal to 0.8% of their covered deposits by 24 July 2024. Covered deposits are defined as any deposits not exceeding the repayable coverage limit of €100,000 per depositor and bank. Moreover, the repayment period associated with a compensation event is gradually being reduced from 20 to seven working days within the EU. In Germany, this shortened period of seven working days has applied since 1 June 2016. The harmonised requirements are designed to further strengthen depositors' confidence in the banks and to enhance customer protection.

With a view to the future, a pan-European deposit insurance scheme is envisaged. The European Commission's proposals foresee the gradual implementation of a system of comprehensive insurance by 2024, under which bank customers' savings would be covered by a European fund in the event of a bank insolvency. However, as things currently stand, essential criteria for a European deposit insurance scheme (EDIS) have yet to be met. Risks at the European level can be communitised only if all the members of the common deposit insurance scheme make the same efforts to limit the risks. Well-considered economic ideas are needed to preserve the added value of pre-existing protection schemes. To this end, each step must occur in the right order, ie all the necessary preconditions need to be in place before a common deposit insurance scheme is created and the objective of stability must not be jeopardised by an ambitious timetable for creating a common deposit insurance scheme, which could run counter to this objective.