The policy brief by the European Credit Reserch Institute (ECRI) reviews current debate on deposit insurance in the European Union, acknowledging that the existing arrangements in Europe need to be changed as they do not match market integration or consumer expectations.

The wide variety of deposit insurance schemes has not proven to be crisis-resilient. The policy brief authors, Maria Gerhardt and Karel Lannoo, believe that the European Commission's proposals do not represent sufficient response to the problem, as aspects related to the governance of deposit guarantee schemes and their role in financial stability, as well as the cross-border dimension, have not been sufficiently addressed. This leaves scope for regulatory arbitrage, competitive distortions and moral hazard.

They suggest that further harmonisation is desirable to sustain an integrated fnancial market.