Deposit Insurance Suitable for Europe: Proposal for a Three-Stage Deposit Guarantee Scheme with Limited European Liability
|Publication:||Policy Letter No. 8|
|Topic Area:||Financial Institutions|
|Authors:||Jan Pieter Krahnen|
|Keywords:||banking union; deposit insurance; bank risk|
In this note, a new concept for a European deposit guarantee scheme is proposed, which takes account of the strong political reservations against a mutualization of the liability for bank deposits. The three-stage model for deposit insurance outlined in the text builds on existing national deposit guarantee schemes, offering loss compensation on a European level and at the same time preventing excessive risk and moral hazard taking by individual banks.
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