Part IV The European Deposit Insurance System and Policy Perspectives, 14 European Deposit Insurance system (EDIS): Cornerstone of the Banking Union or Dead End?

Subject(s):

Deposit insurance schemes — Financial stability

While the first two pillars of the banking union, a Single Supervisory Mechanism (SSM) and a European Resolution Mechanism (SRM), have been realized rather smoothly, the realization of the third pillar, a European Deposit Insurance System (EDIS), proves a bigger challenge. Already in November 2015 the European Commission issued its EDIS proposal. One year later, the European Parliament rapporteur proposed important amendments in her draft report. Since then, the legislative train has stopped, with the Council making the EDIS discussion dependent on additional risk reduction measures for the banking sector. This chapter examines the goals of creating EDIS, as well as the reasons and possible solutions for the long-lasting deadlock, and critically assesses the main features of the different versions of EDIS currently on the table. It concludes that the competing visions on EDIS equally further banking stability and allow efficient co-operation between the three pillars. From a banking stability perspective, more important than the exact version of EDIS would be other measures to complete the banking union, such as the realization of a common backstop for both the Single Resolution Fund and EDIS.