EBA Publishes Opinion on Improvement of Deposit Guarantee Directive
EBA published its third and final opinion, addressed to EC, on implementation of the Deposit Guarantee Schemes Directive (DGSD) in EU. The opinion focuses on deposit guarantee scheme (DGS) funding and uses of DGS funds and proposes a number of changes to the EU legal framework for DGSD. EBA invites EC to consider the proposals outlined in the opinions when preparing a report on the implementation of DGSD, for submission to the European Parliament and the Council. EBA also published a factsheet on improving depositor protection in EU.
In its opinion, EBA assesses 33 topics related to DGS funding and uses of DGS funds, setting out 23 proposals for improving the legal framework for DGSD in EU. EBA calls for a clarification on what funds should count toward the available financial means (that is, ex-ante funds) of DGS and a clarification about when different DGS funding sources (including loans) can be used and under what conditions. The opinion also addresses the need to introduce more transparency in relation to the reporting of DGS funds, more consistency in the approach to payment commitments, and more precision in the DGSD in relation to how DGS funds should be invested.
In addition, the opinion recommends the need for EC to further consider the consequences of the recent General Court ruling in the Tercas case, concerning the use of DGS funds to prevent failure of credit institutions and the ceiling up to which DGS funds can be used for such failure prevention. EC should also consider introducing, in the EU framework, the possibility to use assets of a failed institution to repay depositors. However, no changes have been proposed to the current DGSD provisions in relation to the minimum target level for the ex-ante funds, the target level basis, and the possibility for DGSs to continue collecting contributions above the minimum target level. The opinion also recommends that there is no need for changes in relation to contributions from third-country branches or for immediate changes to the risk-based contributions based on the assessment of their impact on different business models.
Article 19(6) of the DGSD requires EBA to support EC in its development of a report on the progress toward implementation of the DGSD. The opinion on DGS funding and uses of DGS funds is the third part of the fulfillment of this mandate by EBA. This opinion follows the first opinion on eligibility of deposits, coverage level, and cooperation between DGSs (published in August 2019) and the second opinion on DGS payouts (published in October 2019).
Related Links
Keywords: Europe, EU, Banking, Deposit Guarantee Schemes, DGSD, Opinion, Deposit Guarantee Fund, Resolution Framework, EC, EBA
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
BCL Issues Updates on AnaCredit ReportingRelated Articles
EBA Finalizes Templates for One-Off Climate Risk Scenario Analysis
The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.
EBA Mulls Inclusion of Environmental & Social Risks to Pillar 1 Rules
The European Banking Authority (EBA) recently published a report that recommends enhancements to the Pillar 1 framework, under the prudential rules, to capture environmental and social risks.
BCBS Consults on Disclosure of Crypto-Asset Exposures of Banks
As a follow on from its prudential standard on the treatment of crypto-asset exposures, the Basel Committee on Banking Supervision (BCBS) proposed disclosure requirements for crypto-asset exposures of banks.
BCBS and EBA Publish Results of Basel III Monitoring Exercise
The Basel Committee on Banking Supervision (BCBS) and the European Banking Authority (EBA) have published results of the Basel III monitoring exercise.
PRA Updates Timeline for Final Basel III Rules, Issues Other Updates
The Prudential Regulation Authority (PRA) recently issued a few regulatory updates for banks, with the updated Basel implementation timelines being the key among them.
US Treasury Sets Out Principles for Net-Zero Financing
The U.S. Department of the Treasury has recently set out the principles for net-zero financing and investment.
EC Launches Survey on G7 Principles on Generative AI
The European Commission (EC) launched a stakeholder survey on the draft International Guiding Principles for organizations developing advanced artificial intelligence (AI) systems.
ISSB Sustainability Standards Expected to Become Global Baseline
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
IOSCO, BIS, and FSB to Intensify Focus on Decentralized Finance
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
BCBS Assesses NSFR and Large Exposures Rules in US
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.
