Structuring Deposit Insurance for a United Europe

94-22

Posted: 15 Jul 1998

See all articles by Anthony M. Santomero

Anthony M. Santomero

University of Pennsylvania - The Wharton School

Jeffrey J. Trester

University of Pennsylvania, Wharton School

Date Written: April 1993

Abstract

This paper analyzes the difficulties associated with bank regulation and deposit insurance in a unified Europe. Specifically, the consequences of the Second Coordinating Banking Directive and the "common passport" branching regulation are explored. Issues of deposit insurance premiums and taxes on banks (including reserve taxes) are analyzed in the context of a general equilibrium model. The results indicate that taxes and deposit insurance are interdependent in such a structure. Therefore a common insurance fund may not be specific for a unified insurance scheme; coordinated and even unified taxation may also be necessary. At the minimum, exceedingly close macroeconomic policy coordination will be necessary for the single market for financial services to truly come to fruition and be stable. A similar degree of cooperation will be necessary in the area of bank regulation as well.

JEL Classification: F36, F42, G21

Suggested Citation

Santomero, Anthony M. and Trester, Jeffrey J., Structuring Deposit Insurance for a United Europe (April 1993). 94-22. Available at SSRN: https://ssrn.com/abstract=7073

Anthony M. Santomero (Contact Author)

University of Pennsylvania - The Wharton School

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Jeffrey J. Trester

University of Pennsylvania, Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States
215-898-1279 (Phone)
215-573-8757 (Fax)

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