Deposit Insurance in the European Union

Abstract

Member countries face many challenges in institutional design and implementation of the DGSD (Directive 2014/49/EU) onto national legislation. In addition, the BRRD (Directive 2014/59/EU) prescribes a complex set of rules for problem and failing banks’ recovery and resolution process, in addition to normal insolvency proceedings and with the use of private funds for the public interest of preserving financial stability. This chapter provides an overview of the development of legislative framework on deposit insurance for European Union member countries. It explores new imposed DIS’s rules on the coverage level and scope, shortened payout time frame, risk-based funding, use of DIS’s funds, minimum target fund size level, improved cross-border cooperation and better informed depositors. It explains the EBA’s methodology on differential premium system and the proposal for the regulation on establishment of the European DIS (EDIS).