Deposit Guarantee Schemes reimburse a limited amount of deposits to depositors whose bank has failed. From the depositors' point of view, this protects a part of their wealth from bank failures. From a financial stability perspective, this promise prevents depositors from making panic withdrawals from their bank, thereby preventing severe economic consequences.
On 12 July 2010, the Commission adopted a legislative proposal for a thorough revision of the Directive on Deposit Guarantee Schemes. It mainly deals with a harmonisation and simplification of protected deposits, a faster payout, and an improved financing of schemes. These proposed amendments follow urgent legislative changes that the Commission proposed in 2008 and that entered into force early 2009. The proposal is accompanied by a report.
- Press release (12.07.2010)
- Frequently Asked Questions
- Text of the proposal
- Impact Assessment
- Summary of the Impact Assessment
- Citizens' summary
Disclaimer: The texts published above may be different from the final versions adopted by the Commission. Only the versions published on EUR-Lex prevail.
Moreover, a number of reports were commissioned in recent years, an expert roundtable took place in March 2009 and in 2006 a Communication was issued.
- JRC Report under Article 12 of Directive 94/19/EEC (2011)
- Report on possible models for risk-based contributions to EU Deposit Guarantee Schemes
- Deposit Guarantee Schemes: Public consultation
- Informal Experts Roundtable on Deposit Guarantee Schemes (DGS) on 31 March 2009 in Brussels
- Report “Risk-based contributions in EU Deposit Guarantee Schemes”
- Report “Investigating the Efficiency of EU Deposit Guarantee Schemes”
- Commission proposes self-regulatory improvements to deposit guarantee schemes
- Scenario Analysis: Estimating the effects of changing the funding mechanisms of EU Deposit Guarantee Schemes
- Report on minimum guarantee level of Deposit Guarantee Schemes Directive 94/19/EC
In its interim version, this report served as a basis for the impact assessment and the legislative review. Beyond this, its final text sheds light on almost every aspect of Deposit Guarantee Schemes in the EU.
On the basis of the previous report describing risk-based models applied across Member States, the new report assesses possible criteria for determining such contributions. This report from the Joint Research Centre complements the public consultation that has also addressed this issue. Both the report and the contributions to the consultation will be taken into account for the current review of the Directive on Deposit guarantee Schemes.
This consultation intended to gather contributions from the public for the review of the Directive on Deposit Guarantee Schemes in view of the report (and, if appropriate, legislative proposals) to be submitted from the Commission to the European Parliament and the Council by the end of 2009.
The Commission services invited experts in the field of Deposit Guarantee Schemes to discuss some aspects of the Commission's review. The minutes of this meeting are available here:
The European Commission has proposed a revision to EU rules on deposit guarantee schemes that puts into action the commitments made by EU Finance Ministers 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.
The European Parliament has adopted amendments to the Commission proposal in its plenary meeting (first reading) of 18 December 2008.
The Council has adopted these amendments on 26 February 2009.
One of the self-regulatory issues identified by the European Commission Communication on Deposit Guarantee Schemes (DGS), published in November 2006, is the voluntary introduction of risk-based contributions in EU DGS. With the objective of developing potential models for adjusting DGS contributions, the Commission's Joint Research Centre has been requested to investigate current practices across EU Member States.
The report describes the risk-based models and monitoring systems applied across the Member States. It highlights the fundamental principles underlying risk determination and provides a technical description of the mathematical tools employed, including numerical examples of each method.
The last part of this report describes the risk-based system applied by the US Federal Deposit Insurance Corporation.
Report “Investigating the Efficiency of EU Deposit Guarantee Schemes”
To support the review of Directive 94/19/EEC on Deposit Guarantee Schemes (DGS), the Commission's Joint Research Centre has been requested to investigate how efficiently EU DGS might be able to deal with bank failures of different magnitudes.
The report first investigates the financial resources available to schemes. DGS have a variety of different funding arrangements, including capital held directly in DGS accounts (ex ante funds), financing based on ex post contributions from member banks, special borrowing facilities, etc. The report assesses the robustness of schemes in all Member States (with the exception of Germany) and Norway based on their funding arrangements.
The research tested several scenarios, based on data obtained from real-life banking crises which occurred in the past. The scenarios range from a small domestic failure to the failure of a large cross-border credit institution. The impact of each scenario is then compared with the available resources of schemes. The report reveals that most schemes would be capable to deal with a mid-size bank failure.
The report also briefly analyses payout delays and examines the main features of the US deposit guarantee system. Some comparisons with the EU schemes have been made.
In the annexes to the report, an overview is provided of the internal procedural steps that schemes have to follow. The annexes also update key data contained the 2007 report on the funding of schemes.
The report can be downloaded here:
The European Commission has set out, in the form of a Communication, its approach to modernising current EU legislation on deposit guarantee schemes, which provide consumers with a safety net so that, if a bank fails, they will be able to recover at least €20,000 of their deposits. The Commission has concluded that while the current rules are sufficient for the time being, a number of self-regulatory steps could be taken to improve how schemes work cross-border within the EU. A more fundamental overhaul is considered premature at this stage, while any decision about further convergence of national rules and practices is tied to broader discussions on crisis management.
- The press release (28.11.2006)
Communication of the Commission
Please note that the table in Annex III of the Communication contains three erroneous figures concerning Austria and Luxemburg. The table should read as follows:
Low coverage, low risk adjusted fund Low coverage, medium risk adjusted fund Low coverage, high risk adjusted fund
512 640 000
683 520 000
854 390 000
16 700 000
22 300 000
27 880 000
268 580 000
358 110 000
447 640 000
90 820 000
121 100 000
151 370 000
8 620 000
11 500 000
14 370 000
1 703 930 000
2 271 910 000
2 839 880 000
2 601 290 000
3 468 440 000
4 335 530 000
Scenario Analysis: Estimating the effects of changing the funding mechanisms of EU Deposit Guarantee Schemes
In support of the review of Directive 94/19/EEC on Deposit Guarantee Schemes, the Commission's Joint Research Centre has been requested to investigate the cost implications associated with the possible harmonization of Deposit Guarantee Schemes' funding mechanisms. At present, the Directive leaves the Member States free to choose the funding mechanism best suited to their own banking environment. As a result, guarantee schemes' funding systems in the EU are widely heterogeneous. While some Deposit Guarantee Schemes are financed by regular contributions from members (banks) in order to build up or maintain a float ready to be used in the event of a crisis ('ex ante'), others are not pre-financed at all, but require their members to step in only after a bank has failed and to finance payouts to depositors ('ex post'). There are also mixed forms of schemes between ex ante and ex post financing.
Different cost structures in different countries might lead to a distortion of competition among banks, which would not be in line with the single market objective. Thus, the Commission has investigated whether there is a case for harmonizing the way in which schemes are funded. The Commission's Joint Research Centre has been asked to conduct of a quantitative analysis of the costs associated with modifying the existing funding mechanisms of deposit guarantee schemes throughout the EU on the basis of different scenarios. The final report can be downloaded here:
In accordance with Article 7(5) of the Deposit Guarantee Schemes Directive (94/19/EC), the Commission has been reviewing the € 20.000 minimum guarantee threshold with a view to assessing whether any changes to the guarantee level might be necessary. A tentative conclusion of the report would be that the pursuit of genuinely harmonised conditions for protection of deposits is not achieved by the fixing of a single guarantee level for all MS. The information available is however not sufficient to reach definitive conclusions about whether the minimum guarantee level needs to be adjusted and further work will therefore be necessary in the coming years to improve availability of deposit data.
The Commission invites contributions and comments on the report and its conclusions.
Personal data (of individuals) collected with the comments may be published on the Commission's website unless specifically requested otherwise.