Building a Stable European Deposit Insurance Scheme

Dirk Schoenmaker

Journal of Financial Regulation, 2018, vol. 4, issue 2, 314-320

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 article, 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 destabilizing in times of crisis.

Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:oup:refreg:v:4:y:2018:i:2:p:314-320.

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