GROS: The case for euro deposit insurance
Daniel Gros, Dirk Schoenmaker, 24 September 2012
As the EZ takes its first steps towards banking union, this column warns that such an approach – with banking supervision first and resolution and deposit insurance postponed to some undefined later stage – will lead to an unstable banking union. It adds that a strong European supervisor and a credible European resolution and deposit insurance authority should be introduced as part of the package.
...Recent IMF and World Bank studies find that the
'typical' fiscal cost of a crisis seems to be about 5% of GDP. If one accepts
this figure for the 'typical' fiscal cost of a crisis it follows that an EDIRA
endowed with a fund of €50 billion should be sufficient to handle a 'typical'
crisis for all smaller member countries (like Greece, Portugal or Ireland
today) and possibly even for Spain with a GDP of €1,000 billion.
..The debate about Banking Union is running into the
typical chicken-and-egg problem: Most academic observers agree that deposit
guarantee and resolution should be organised at the same level as supervision.
But at present only the creation of a ‘Single Supervisory Mechanism’ (SSM) to
be headed by the ECB is being discussed; with deposit insurance and resolution
to be considered only later when this SSM has shown its effectiveness.
We argue that the SSM is unlikely to be working well
unless a European Deposit Insurance and Resolution Agency is introduced
gradually at the same time.
A principal razão para começar a construir a união bancária Eurozone com um novo Fundo Europeu de Seguro de Depósitos é reduzir drasticamente o risco para os depositantes LOCAIS e, assim, promover a poupança LOCAL e estabilizar o financiamento bancário LOCAL, componentes essenciais de qualquer solução para a crise da Eurozone.
ResponderEliminarDeposit insurance for smaller deposits is a critical way to compensate for faulty banking regulation and to protect small retail savers from bank (and system) mismanagement. In the US New Deal, Deposit Insurance of smaller deposits of commercial banks, was supported by the Glass Stegall Act, which segregated plain vanilla commercial banking from speculative investment banking.
ResponderEliminarIn Europe today, we need an European deposit insurance scheme for small local retail deposits, leaving the professional cross-border investors (speculators, arbitrageurs, etc) to take the consequences of their investment decisions, a modern day separation a la Glass Stegall.
And we need to regulate the European financial regulators, which have failed miserably and appear to have been captured by the creditors.