An evaluation of deposit guarantee schemes in the EU

Abstract

The main objective of the thesis is to evaluate Deposit Guarantee Schemes in the European Union. An examination of the local and European legal regime shall be conducted. The research derives a framework to understand whether an increase in the capping of such schemes will result in greater confidence in the financial system. The study explores how deposit insurance is gaining in popularity but simultaneously its desirability is continually debated due to problems of moral hazard. Concerns of systemic risk will be discussed, where the demise of one bank can spill over to others. The research shall establish the overall level of knowledge, awareness and perceptions of depositors with respect to these schemes, and any misunderstandings or unrealistic expectations which can hinder their efficient functioning and lead to adverse selection. The study explores whether depositors have access to clear adequate information about the schemes and discusses ways in which lack of knowledge and awareness can be tackled. The research shall establish whether the idea of a single pan-European Deposit Guarantee Scheme will be beneficial for the welfare of Member States and their citizens.