The Financial Background of the European Deposit Guarantee Schemes and the Resolution Mechanism

Tóth, József (2015): The Financial Background of the European Deposit Guarantee Schemes and the Resolution Mechanism.

Abstract

The new directives of the European Parliament and the European Council issued in 2014 define unified expectations regarding deposit guarantee schemes and regarding banking resolution mechanism to be applied in territory of each EU member states. Moreover, the so called Single Resolution Fund must be implemented by euro member states in order to finance the resolution processes. The article introduces the main rules of the unified systems as well as deals with their financial background. The European Commission declared in its statement the target level of the Single Resolution Fund which is EUR 55 billion. However, we provide evidence that this target level is underestimated.

• Item Type: MPRA Paper
• Language: English
• Keywords: banking resolution, deposit guarantee scheme
• Subjects: E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies; G - Financial Economics > G2 - Financial Institutions and Services > G20 - General; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation; G - Financial Economics > G3 - Corporate Finance and Governance > G38 - Government Policy and Regulation

References

1. CLAESSENS at al.[2010]: A Safer World Financial System: Improving the Resolution of Systemic Institutions, Geneva Reports on the World Economy 12, International Center for Monetary and Banking Studies

2. COUNSIL of the EUROPEAN UNION[2014]: Agreement on the Transfer and Mutualisation of Contribution to the Single Resulution Fund, ECOFIN, Brussels

3. DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCI [2013b]: 2013/36/EU directive on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC, 2013 június 26., http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L:2013:176:FULL&from=HU

4. DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL [2014a]: 2014/49/EU directive on deposit guarantee schemes, http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014L0049&from=EN

5. DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL [2014b]: 2014/59/EU directive on establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council, http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014L0059&from=EN

6. ENGINEER, M. – SCHURE, P. – GILLIS, M.[2012]: A Positive Analysis of Deposit Insurance Provision: Regulatory Competition Among European Union Countries, Journal of Financial Stability, Vol. 9, No. 4, pp. 530-544

7. EUROPEAN COMMISSION [2007]: Investigating the efficiency of EU Deposit Guarantee Schemes, http://publications.jrc.ec.europa.eu/repository/bitstream/JRC48944/jrc%20s%26t%20dgs%20eff.pdf

8. EUROPEAN COMMISSION [2009]: JRC Report under Article 12 of Directive 94/19/EC as amended by Directive 2009/14/EC, http://ec.europa.eu/internal_market/bank/docs/guarantee/jrc-rep_en.pdf

9. EUROPEAN COMMISSION [2013]: Updated estimates of EU eligible and covered deposits, https://ec.europa.eu/jrc/en/publication/eur-scientific-and-technical-research-reports/updated-estimates-eu-eligible-and-covered-deposits?search

10. EUROPEAN COMMISSION [2014a]: Statement - Finalising the Banking Union: European Parliament backs Commission’s proposals (Single Resolution Mechanism, Bank Recovery and Resolution Directive, and Deposit Guarantee Schemes Directive), http://europa.eu/rapid/press-release_STATEMENT-14-119_en.htm

11. EUROPEAN COMMISSION [2014b]: European Economic Forecast, Autumn 2014, EUROPEAN ECONOMY 7|2014, http://ec.europa.eu/economy_finance/publications/european_economy/2014/pdf/ee7_en.pdf

12. EUROPEAN COUNCIL [2012]: Towards a genuine Economic and Monetary Union – report by President of the European Council, Herman Van Rompuy, http://ec.europa.eu/economy_finance/crisis/documents/131201_en.pdf

13. GROS, D. – SCHOENMAKER,D. [2014]: European Deposit Insurance and Resolution in the Banking Union, Journal of Common Market Studies, 2014, vol. 52, issue 3, pages 529-546

14. HOWARTH,D. – QUAGLIA,L. [2014]: The Steep Road to European Banking Union: Constructing the Single Resolution Mechanism, Journal of Common Market Studies, 2014, vol. 52, pp 125-140

15. MICOSSI, S. – BRUZZONE,G. – CARMASSI, J. [2013]: The New European Framework for Managing Bank Crises, Centre for European Policy Studies, No. 304

16. PISANY– FERRY at al.[2012]: What kind of European Banking Union?, Bruegel Policy Contribution, Issue 2012/12

17. REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL [2013a]: 575/2013/EU regulation on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012, http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L:2013:176:FULL&from=HU

18. REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL [2014c]: 806/2014/EU regulation on establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010, http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014R0806&rid=3

19. SCHOENMAKER, D. [2011]: The financial Trilemma, Duisenberg school of finance - Tinbergen Institute Discussion Paper, TI 11-019/DSF 7

20. VÍTOR CONSTÂNCIO [2013]: Towards the Banking Union, http://www.ecb.int/press/key/date/2013/html/sp130212.en.html