A Deposit Guarantee Scheme for the Eurozone
The European Commission will put forward proposals for a Deposit Guarantee Scheme (DGS) for the Eurozone on 24 November 2015. The cep sets out six prerequisites such Eurozone DGS should meet.
According to economic theory, a Eurozone Deposit Guarantee Scheme may offer a comparative benefit over the existing deposit guarantee schemes. The prerequisites which have to be met in order to correct false incentives make it imperative to establish a scheme with "national compartments". However, these compartments reduce the comparative advantage of a deposit guarantee scheme for the entire Eurozone. There is therefore no compelling case for a Eurozone Deposit Guarantee Scheme.