International work of the FGDR
A global "financial safety net” to avert the risk of a crisis
Although deposits have long enjoyed government protection on a more or less implicit basis, in many countries they are now largely covered by explicit institutionalised guarantees.
Created for this purpose, deposit guarantee schemes, and resolution funds when they exist separately, are a key element of the “financial safety net" put in place in each country to ensure the stability of the financial system.
Their work in ensuring that all needs relating to financial security are covered complements that of the central banks, banking and financial supervisors and public authorities.
European Union initiatives since 2009 in response to bank crises
The European Union’s response to the financial crisis included a new directive in March 2009 which strengthens the framework established by the 1994 directive on deposit guarantee schemes. This 2009 directive harmonised the level of coverage offered to depositors at €100,000 for all bank deposit guarantee schemes within the Union. It also set the depositor compensation period at 7 days. This directive was transposed into French law by the order of 29 September 2010.
In the wake of these emergency measures, the European Union also undertook a review of the 1994 directive on deposit guarantee schemes and the 1997 directive on investor compensation schemes. It also took on the task of defining a common bank crisis resolution regime.
The European Commission proposed a series of draft directives to the Member States:
- in July 2010 for deposit guarantee schemes and investor compensation schemes;
- and in June 2012 for the establishment of a harmonised bank crisis prevention and resolution regime at the European level.
Three key texts were approved in the spring of 2014 on which the European Banking Union is based:
- the directive on the recovery and resolution of banks (BRRD);
- the regulation establishing the framework and governance of the Single Resolution Mechanism and the related Resolution Fund;
- and the new directive on European deposit guarantee schemes (DGSD2).
This latter directive includes significant improvements for depositors: easier protection, with fewer exclusions; faster protection, with a compensation period now set at seven days; and expanded protection, with deposits related to certain extraordinary events (real estate sales, benefit payments, etc.) compensated, in the future, in amounts above the €100,000 coverage level, and the eligibility of deposits in all currencies.
Strong international activity
At the international level, deposit insurers are represented by two associations - the EFDI and the IADI. The FGDR participates in the meetings, discussions and research carried out within these associations, the results of which are shared with international bodies involved in banking regulation: FSB, Basel Committee on Banking Supervision (BCBS), European Commission, European Parliament, European Banking Authority (EBA).