Deposit-Protection Schemes: Issues for an EC Directive

First published in 1992, CEPS has elected to republish this paper some 17 years later in its entirety, given its continued relevance to the EU’s struggle to reform its system of financial supervision in the wake of the financial crisis. A special Foreword by Daniel Gros explains the foresight of Sydney Key and places her analysis in the context of 2009. In April 1992, the European Commission proposed a directive on deposit protection schemes that used a modified home-country approach for branches of banks from other member states and involved a limited amount of harmonisation. The member states had urged the Commission to propose a home-country deposit insurance directive, primarily because of the shift to home-country supervision and regulation of EU branches mandated by the Second Banking Directive. This paper attempts to identify and analyse the major issues facing the member states as they seek agreement on the Commission proposal.