An evaluation of deposit guarantee schemes : an EU perspective and extrapolation of the Maltese DGS governance

Abstract

The Deposit Guarantee Schemes Directive (DGSD): Directive 2014/49/EU stipulates several requirements for deposit guarantee schemes (DGS) in order to achieve harmonisation for depositor protection. Furthermore, DGSs entail several distinct features and are administered by entities organised under private or public law taking into account the legal status and/or governance structure of the Member State. This administrative flexibility enables DGSs to be adapted to the distinctive legal structures and conditions prevalent in each jurisdiction. The objective of this study is to compare, contrast, and evaluate different viewpoints on the designated structures of administration of EU DGSs and various factors which influence their adoption and design. In addition, this research shall assess the structure and implementation of EU DGSs vis-à-vis financial stability and consumer protection, while minimising moral hazard. Furthermore, this research shall determine whether the Maltese DGS should retain itself as a separate legal entity or otherwise, integrates with the national competent authority. The author evaluates the research questions through different perceptions from local and foreign relevant bodies through the results obtained in the analysis. Finally, the author shall propose various recommendations on the best practices, with the intention of providing alternatives and improvements to make the structure and design of the DCS more efficient.