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    EBA Revises Guidelines on Stress Tests of Deposit Guarantee Schemes

    September 15, 2021

    The European Banking Authority (EBA) revised the guidelines on stress tests to be conducted by the national deposit guarantee schemes under the Deposit Guarantee Schemes Directive (DGSD). The revised guidelines extend the scope of the deposit guarantee schemes stress testing by requiring more tests in comparison with the past guidelines and by covering all the legal missions entrusted to the deposit guarantee schemes. These guidelines set out the scope of deposit guarantee schemes stress tests; they also set out the established priority tests that deposit guarantee schemes are required to perform and report results on by means of a dedicated reporting template. The deadline for deposit guarantee schemes to submit their next reporting template is set for June 16, 2024 while the revised guidelines will apply from September 15, 2021.

    The EBA revised the existing guidelines to further strengthen the stress testing framework of deposit guarantee schemes, harmonize the approaches across member states, and enhance comparability of test results. The revised guidelines require that all deposit guarantee schemes test their abilities to perform all their functions and to access all their funding sources. The revisions are also intended to strengthen the cooperation between deposit guarantee schemes and other authorities by requiring deposit guarantee schemes to stress test scenarios where such cooperation is necessary. The new provisions encourage the deposit guarantee schemes to stress test scenarios with additional business continuity challenges, such as a pandemic, information and communications technology (ICT) failures, or other similar events. The revisions aim to consolidate depositor confidence about the ability of their national deposit guarantee schemes to promptly repay their funds in case of banking failure and to help EBA carry out a robust peer review of the national deposit guarantee scheme stress tests in 2025. 

    The original guidelines only requested stress testing of deposit guarantee schemes' ability to reimburse depositors. The revised guidelines also require the deposit guarantee schemes to stress test their ability to have access, in due time, to all of their funding sources, including extraordinary ex-post contributions and alternative funding arrangements (irrespective of the amount of available ex-ante funds collected by the deposit guarantee schemes). The incorporated amendments strengthen  cooperation between the deposit guarantee schemes and different authorities by requiring the stress testing of interventions where cooperation with other authorities is necessary. They additionally encourage the deposit guarantee schemes to choose stress-testing scenarios with additional business continuity challenges or external circumstances that create extra stress for the deposit guarantee schemes to perform their functions, such as a pandemic, ICT failures, or other such events. Furthermore, during the March 2021 public consultation on the draft of these revised guidelines, some respondents highlighted the significant extension of the reporting template guidelines in comparison with the one appended to the former guidelines. In response to this, additional dropdown menus and binary (yes-or-no) questions have been inserted to make the completion of the template by the deposit guarantee schemes more efficient. 


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    Effective Date: September 15, 2021

    Keywords: Europe, EU, Banking, Deposit Guarantee Schemes, DGSD, Stress Testing, Guidance, ICT Risk, EBA

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