The background of the 1994 Directive and the recent amendment were recalled and the Commission gave an overview on the planned timing and related issues, such as the work on early intervention.
In view of the forthcoming Report on Deposit Guarantee Schemes (see Directives 94/17/EC and 2009/14/EC) scheduled for end 2009, this informal roundtable was intended to provide personal expert views, i.e. "out-of-the-box" thoughts unbiased by any prescribed interest group line.
Fixed reimbursement levels: pro and contra on maximum harmonisation The question of having a fixed reimbursement level looks simple but becomes complicated when looking at issues such as alternative (and voluntary) guarantee systems, temporarily high balances, pension deposits, other exemptions etc. or raising the level e.g. in times of a crisis. The principle of maximum harmonisation was deemed essential to ensure the stability of the banking system. In this way, it was considered important to observe the functioning of voluntary systems of depositor's compensation which are not introduced by a Member State.
As regards the future increase to € 100 000, many experts were of the opinion that the limit could be substantially lower (or more targeted to different deposit levels), but acknowledged that this was a psychological and political amount: to put depositors entirely at rest as regards protection of the vast majority of their deposits and as a response to a crisis situation.
Concerning the fixing of the level, they pointed out the competitive angle when the aim was to create a single market: on one hand, experience with the former export ban has shown that different levels in Member States in principle do not pose great concerns (i.e. in normal times, depositors do not necessarily only put their money where the level is highest), on the other hand, in the events of the crisis the unilateral increase in certain Member States had recognisable effects in other Member States; in fact differencesbetween guarantees offered by deposit guarantee schemes, especially in the case of subsidiaries, could entail withdrawals of deposits from banks which offer a lower guarantee. The latter could be avoided by a fixed level – and complex issues such as topping-up or exemptions of investors could be dropped. .
At least, "post-box" agreements between home and host DGS should be encouraged in order to defend the interests of depositors of branches located in the host state (by e.g. simplifying depositors' applications, resolving the question of languages, as for instance in the master agreement between the DGS of France and the DGS of Hungary which organises notably the host state scheme's obligation to provide services on behalf of the home state scheme in order to compensate depositors, located in the host country). But it was also mentioned that neither consumer protection nor financial stability were good arguments for maximum harmonisation of the level; the system had evolved from a solution to incidental bank failures to a crisis tool where the "banks to fail" were not known. Against this background, consumer awareness raising (higher interest rate might entail higher counterparty risk) was not an issue for discussion any more. To the contrary, in some cases there was even a "reward" because depositors were paid the deposit plus the higher interest rate. However, experts thought that the evaluation of the soundness of a bank will most likely have to be left to supervisors alone.
To some extent, different types of schemes (which are not necessarily designed for payout only) were also addressed. In this regard, positive experiences of schemes designed to prevent any failures in the first place were mentioned. Some experts also pointed out that harmonisation of the level – if it is to be meaningful in practice and not just a political statement - should also entail a reduction of the number of DGS (from more than 40 presently) to one per Member State.
© European Commission
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