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The Role for Deposit Insurance Funds in Dealing with Failing Banks in the European Union
Author:
Mr. Atilla Arda
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Mr. Marc C Dobler
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https://orcid.org/0000-0002-9166-195X
Series:
IMF Working Papers
Volume/Issue:
Volume 2022: Issue 002
Language:
English
Publication Date:
07 Jan 2022
DOI:
https://doi.org/10.5089/9781616358075.001
ISBN:
9781616358389
ISSN:
1018-5941
Pages:
27
Keywords:
Deposit Insurance, Bank Resolution, Banking Union, Crisis Preparedness, Crisis Management, Euro Area, European Union, Financial Crisis, Financial Stability; deposit insurance; aid rule; single market; liquidation regime; host authorities' concern; EU response; fiscal authorities; authorities in host jurisdiction; Deposit insurance; Bank resolution; Bank resolution framework; Distressed institutions; Financial safety nets; Global
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper argues that in the European Union (EU) deposit insurance funds are too difficult to use in bank resolution and too easy to use outside resolution. The paper proposes reforms in three areas for the effective management of bank failures of small and medium-sized banks in the European Union: making resolution the norm for dealing with failing banks; establishing a common DIS for the European Union; and increasing funding and backstops for deposit insurance while removing constraints on their use for resolution measures. Without these changes, the European Union will continue to be challenged by banks that are too small for resolution and too large for liquidation.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2022: Issue 002