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Guaranteeing the safety of deposits in Europe

Guaranteeing the safety of deposits in Europe© Konrad Mostert

Proposed revision of EU rules on Deposit Guarantee Schemes


The European Commission has put forward a revision of EU rules on deposit protection that puts into action commitments made at the last EU Finance Ministers meeting on 7 October 2008. The new rules are designed to improve depositor protection and to maintain the confidence of depositors in the financial safety net and the proposals are largely based on the work done in this field by the JRC's Institute for the Protection and Security of the Citizen (IPSC).

The purpose of the Directive on Deposit Guarantee Schemes (1994/19/EC) is to protect a portion of depositors' savings and to ensure confidence in the banking sector. It has remained unchanged since 1994 but is now being updated in order to respond to the ongoing financial crisis. The minimum level of coverage for deposits will be increased within one year from €20,000 to €100,000, and initially to €50,000 for the intervening period. The time allowed for the deposit guarantee schemes to pay depositors in case of bank failure will be reduced from 3 months to 3 days. Due to the urgency of the matter, neither an impact assessment nor a public consultation could be carried out for the proposal, but the Commission has made use of the work developed by JRC and supported by the European Forum of Deposit Insurers (EFDI). The underlying JRC technical reports on the coverage level (2005), on the possible harmonisation of funding mechanisms (2006/7), and the efficiency of deposit guarantee schemes (2008) are all available online.