Deposit Guarantee Schemes and Bank Crisis Management: Legal Challenges Arising from the European Legal Framework
Rivista Italiana di Diritto Pubblico Comunitario, 2022, pp. 753-755
18 Pages Posted: 2 Dec 2020 Last revised: 28 Jul 2023
Date Written: November 21, 2022
Abstract
During the early years of application, the common bank Crisis Management and Deposit Insurance (CMDI) framework showed several areas of inefficiency for which three main causes can be identified: firstly, the existence of a common European framework alongside various heterogeneous national frameworks; secondly, the rigidity and the lack of proportionality of the CMDI itself; thirdly, the practical approach of the Single Resolution Board. In substance, the supranational resolution framework was applied in a very limited way, and the crises hitting the less significant banks – and the significant ones not subject to resolution – have mainly been managed at the national level. Recent experience has shown that Deposit Guarantee Schemes can play a fundamental role in preventing and managing the banking crisis in a role that is, however, strongly limited by the current regime. This paper analyses those limits and makes some suggestions as to how to address and overcome them.
Keywords: bank insolvency, bank resolution, significant and less significant banks, deposit guarantee schemes, bank runs, financial stability, state aid
JEL Classification: G01, G08, G21, K22, K23
Suggested Citation: Suggested Citation