Suchergebnisse

Purpose
This paper aims to analyze the development of European Deposit Insurance (DI) and assess the recent development at the EU level to establish a European Deposit Insurance Scheme (EDIS) in the context of a more integrated financial framework: the Banking Union (BU).


Design/methodology/approach
The author uses literature review and empirical evidence to analyze the dynamic interaction among European governments in an effort to attract aggressive deposits with severe repercussion for financial stability.


Findings
The paper argues that a liquidity providing EDIS would render regulatory subsidy and rent-seeking behavior persisting by allowing national policies to be pursued with considerable discretionary power and in the context of increasing competition for deposits. This would run contrary to the BU objectives and constitute a major failure of the program.


Practical implications
The findings of the study can be helpful in understanding the DI policies pursued by European governments and their implications.


Originality/value
To the best of the authors' knowledge, this is the first study that examines the interactions among European governments in pursuing DI policies and assesses the implications of EDIS.

Additional protection of the stability of the banking system and deposited funds in the banks and savings houses is provided by the systems for deposit insurance (implicit or explicit). Wolrdwide, particularly in the developing countries and economies in transition, there is a tendency to introduce explicit systems, because they are considered to have the following advantages: 1/ they have better administrative procedure for dealing with banks'bankruptcies and depositors protection; 2/ they are more efficient in protecting the "small depositors", because at least partial compensation is guaranteed to them in a case of a risky event, and 3/ they contribute to a larger extent in improving the establishing and maintaining public confidence in the country's banking system. With a Directive from 1994 the European Union also urged to its member countries to introduce explicit deposit insurance schemes. In the Republic of Macedonia there is a Savings Insurance Fund, as an explicit system for savings protection, established as a shareholding company by the banks and savings houses. The Fund regularly collects the insurance premiums, but points out some problems in its operations, like the lack of independence in the decision making, insufficient information, and limited scope of activities. The Fund has a specific character and should not function as a classic shareholding company, because of the: 1/ basic objective of its functioning; 2/ current regulation requiring mandatory membership in the Fund; 3/ needs of the Fund for more information on the activities of the members being not satisfied; 4/ unsustainability of duality in executing the supervision function, and 5/ elimination of the possibility for the Fund's shares to be traded on the Macedonian stock exchange.

The report discusses a variety of issues involving difficulties in the banking sector, with a view to ascertaining the appropriate institutional infrastructure in the context of the European Union and the euro area. Forbearance on the part of banks dealing with delinquent borrowers is problematic if it is designed as a way to game creditors and supervisors. Supervisors should not tolerate excessive forbearance; failure to intervene early tends to increase the costs of the crisis. Macro-prudential concerns should not induce the authorities to delay clean-ups of banks in difficulties. To minimise the macroeconomic fallout from banking problems and to reduce the temptation for authorities to delay and hide problems in banking, it is necessary to have a viable resolution regime that leaves room for authorities to reduce the systemic fallout from resolution. The Advisory Scientific Committee calls for the establishment of strong European bodies responsible for banking supervision and bank resolution. A European competence is necessary to ensure that cross-border concerns are given appropriate weight in supervision and resolution.