January 13, 2016
Credible, sustainable deposit protection / Cooperative Financial Services Network and Savings Banks Finance Group reject pro-posed EDIS for mutualization of deposit insurance in the eurozone
On November 24, 2015, the European Commission put forward its proposal for a regulation to establish a deposit insurance system for the EU member states that belong to the banking union. Its stated aim is to merge national deposit guarantee schemes to form one European deposit insurance system (EDIS) to create a fully-fledged banking union. Deposit insurance in the eurozone is planned to be fully mutualized in three stages from 2017 to 2024 by creating a centralized European deposit insurance fund (DIF). The National Association of German Cooperative Banks (BVR) and the German Savings Banks Association (DSGV) are strongly opposed to any mutualization of deposit insurance within the eurozone, because it is neither necessary nor appropriate. Instead, it would create cross-border liability obligations without any adequate means of (risk) control. Given that current conditions in the individual countries, banks and deposit guarantee funds are very different, the redistribution of risk would result in an uncontrolled transfer union in the area of deposit protection. This would be at the expense of depositors and banks, and ultimately also at the expense of taxpayers in countries with functioning deposit guarantee funds because their liability risk within the eurozone would increase. The consequence would not be more stability and security, it would be further conflict in Europe.