Proposal for a European Deposit Insurance Scheme (EDIS)


Proposal for a European Deposit Insurance Scheme (EDIS)

November 2015


On 24 November 2015, the European Commission published its Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) 806/2014 in order to establish a European Insurance Scheme. This legislative proposal envisages the establishment of a European Deposit Insurance Scheme (EDIS) as the third pillar of Banking Union in three successive stages:

  • a reinsurance scheme for participating national Deposit Guarantee Schemes (DGSs) in a first period of three years;
  • a co-insurance scheme for participating national DGSs in a second period of four years;
  • full insurance for participating national DGSs in the steady state.

A national DGS can only benefit from EDIS if its funds are being built up in line with a precise funding path and it otherwise complies with essential requirements under Union law.

The Single Resolution Board, which would be expanded to administer EDIS, would monitor national DGSs and release funds only where clearly defined conditions are met. The introduction of EDIS would be accompanied by ambitious measures in parallel to reduce risks in the banking sectors of Member States.

EDIS would progressively evolve from a reinsurance scheme into a fully mutualised co-insurance scheme over a number of years.
In the context of efforts to deepen the Economic and Monetary Union (EMU), together with the work on the establishment of bridge-financing arrangements for the Single Resolution Fund (SRF) and on developing a common fiscal backstop, this step is necessary to reduce the bank/sovereign links in individual Member States by means of steps towards risk sharing among all the Member States in the Banking Union, and thereby to reinforce the Banking Union in achieving its key objective.

EDIS addresses the misalignment between the Union supervision and resolution of banks in the participating Member States, on the one hand, and the effectiveness and credibility of national DGSs in case of failure of those same banks on the other.

EDIS would contribute to reducing the link between the perceived fiscal position of individual Member States and the funding costs of banks operating in those Member States and thereby help breaking the link between sovereigns and banks.

This would increase the resilience of the banking sector against future crises and contribute to the overall objective of financial stability which underpins the economic and monetary policy of the Union.

EDIS applies to all DGSs that are officially recognised in a participating Member State and to all credit institutions affiliated to such schemes. The participating Member States are those whose currency is the euro and those other Member States that have established a close cooperation with the European Central Bank to participate in the SSM.

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

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