Building a Stable European Deposit Insurance Scheme

Forthcoming in Journal of Financial Regulation 4(2)

9 Pages Posted: 25 May 2018

See all articles by Dirk Schoenmaker

Dirk Schoenmaker

Rotterdam School of Management, Erasmus University; Erasmus Research Institute of Management (ERIM); Centre for Economic Policy Research (CEPR)

Date Written: May 14, 2018

Abstract

Deposit insurance, like any insurance scheme, raises moral hazard concerns. Such concerns arising from European deposit insurance can be alleviated through a country-specific component in the risk-based premium for deposit insurance and limits on sovereign bond exposures on bank balance sheets. This paper, which forms part of the Euro Area Reform debate, argues, however, that proposals to maintain national compartments in a new European Deposit Insurance Scheme are self-defeating, as such compartments can be destabilising in times of crisis.

Keywords: Deposit insurance, Banking Union, moral hazard, risk-based premium

JEL Classification: F36, F42, G21, G28

Suggested Citation

Schoenmaker, Dirk, Building a Stable European Deposit Insurance Scheme (May 14, 2018). Forthcoming in Journal of Financial Regulation 4(2). Available at SSRN: https://ssrn.com/abstract=3178261 or http://dx.doi.org/10.2139/ssrn.3178261

Dirk Schoenmaker (Contact Author)

Rotterdam School of Management, Erasmus University ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam
Netherlands

HOME PAGE: http://www.rsm.nl/people/dirk-schoenmaker/

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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