Logo Eurofi

Home > Speakers' views

Resilience of the EU financial sector in the global context - Towards a EU DGS?

Credible deposit protection requires reliable EU policy

By Schackmann-Fallis Karl-Peter - Executive Member of the Board, Deutscher Sparkassen- und Giroverband (DSGV)


The EU Deposit Guarantee Scheme Directive (DGSD), which was to be transposed into national law by 3rd July 2015, has legally enshrined the rights of depositors to EUR 100,000 in all member states of the European Union as well as strict quality standards within the various systems. By far not all Member States have implemented the DGSD, whereas other countries – such as Germany – have, in addition to deposit guarantee schemes, extensive institutional protection systems in place that ensure the solvency and liquidity of the whole institution and consequently of its depositors. These systems were fitted with adequate financial reserves accumulated during decades. Presenting a legislative proposal on an issue that goes to the core of relations between banks and their clients before the relevant Directive is even fully implemented in all Member States, and this without a member state consultation or an impact assessment, raises questions about the legitimacy and governance structures in Europe.

Raises questions about the legitimacy and governance structures in Europe.

To say the least: it makes market participants wonder where the urgency of the project comes from, given that a review under the DGSD was due in 2019 anyway. Furthermore, the construction of EDIS provides strong incentives for national deposit guarantee schemes not to strive for full implementation. Uncontrolled moral hazard has been a key trigger to severe banking crises and should not be allowed again. The responsibility of countries, banks and their protection systems should be strengthened, not weakened. Risk reducing measures should be taken. Only by sharing risks in a European system the risks will not reduce as an effect. The EDIS proposal would create cross-border liability obligations without offering adequate possibilities of (risk) control and would represent a further step on the road towards an uncontrolled transfer union.