Towards the enhanced role of deposit guarantee schemes  in the European Union crisis management framework

Anna Dobrzańska

doi:10.26354/bb.1.4.93.2023

Published : 2024-02-19

Vol. 93 No. 4 (2023)

Towards the enhanced role of deposit guarantee schemes in the European Union crisis management framework

Anna Dobrzańska

https://orcid.org/0000-0002-8243-9716

DOI: https://doi.org/10.26354/bb.1.4.93.2023

Abstract

Deposit guarantee schemes constitute an important but relatively new element of the financial safety net. Prior to the Global Financial Crisis deposit guarantee schemes in the European Union acted mainly as payboxes with their mandate mostly limited to payout of covered deposits. The crisis experience unveiled many weaknesses in the area of deposit insurance and prompted European lawmakers not only to increase the level of harmonization of regulations in this respect but also to extend the mandate of deposit guarantee schemes. The aim of this article is to present and analyze the evolution of financial regulation related to deposit insurers in the European Union, taking into account their role in crisis management, in particular as regards interventions other than payout. An important part of the article is focused on the critical assessment of the new proposal put forward in 2023 by the European Commission to reform the crisis management and deposit insurance framework (CMDI). The article discusses the potential positive effects of the proposed changes under the CMDI reform as well as possible difficulties and challenges related to their introduction. Results of the analysis indicate that the proposed reform would strengthen deposit guarantee schemes giving them a more prominent role in crisis management. Nevertheless, this new broadened mandate might require strengthening financial capacity of deposit guarantee funds.

Keywords:

deposit guarantee schemes, crisis management, resolution, financial stability

JEL Codes

G01, G21, G28, H12

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Dobrzańska, A. (2024). Towards the enhanced role of deposit guarantee schemes in the European Union crisis management framework. Safe Bank, 93(4), 7–30. https://doi.org/10.26354/bb.1.4.93.2023

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