A mixed deposit insurance system

AuthorDobkowitz, Sonja; Evrard, Johanne; Carmassi, Jacopo; Silva, André; Parisi, Laura; Wedow, Michael
ECB Occasional Paper Series No 208 / April 2018
6 A mixed deposit insurance system
As discussed in Section 3, several proposals on EDIS have introduced the principle
of national DGSs bearing the first burden before the European deposit insurance
fund steps in. This Section provides quantitative information on how the risk-based
contributions would change under such a "mixed" deposit insurance scheme, and
how EDIS exposure and cross-subsidisation would be affected.
6.1 Contributions
First, the mixed deposit insurance scheme is assumed to be funded, with an equal
share of 0.4% of covered deposits, at the national level and at the European level
(the overall target level remains 0.8% of covered deposits). The key change relative
to a fully-fledged EDIS is that the contributions paid by banks to reach the national
0.4% target would be risk-based relative to their national benchmark, and not to the
riskiness of the entire euro area banking system. Therefore, for the purpose of the
national 0.4% target, contributions would still be risk-based, but this would only affect
the distribution of contributions among domestic banks, while the overall national
target would be risk-insensitive and would be fixed at 0.4% of covered deposits in
the domestic banking system. This implies that some banking systems would end up
paying overall less than they would under a fully-fledged EDIS; on the other hand,
some banking systems would pay overall more than they would under a fully-fledged
EDIS. This is illustrated in Table 10, which shows the contributions paid by banking
systems under both a fully-fledged EDIS and under a mixed deposit insurance
scheme: the latter is divided into contributions to the national funds (equal to 0.4% of
domestic covered deposits) and to the European compartment (equal to the
remaining 0.4% of euro area covered deposits). The last two columns report the
overall contributions banking systems would pay under the mixed scheme: the red
cells, in particular, identify the banking systems that would pay more under the mixed
The results indicate that under a mixed deposit insurance scheme Cyprus, Germany,
Spain, Greece, Ireland, Italy and Portugal would pay less than under a fully-fledged
EDIS, while Austria, Belgium, Finland, France, Lithuania, Luxembourg, Malta, the
Netherlands and Slovenia would pay more.

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