Deposit guarantee, deposit insurance, protection scheme

Regulations that ensure that deposits are not lost in the event of a bank’s insolvency. Originally viewed with suspicion because of the risk of moral hazard, correspondingly designed protection schemes are now widespread in almost all countries. Often, the central bank or the supervisory authority also requires banks to guarantee their deposits to small depositors. In Germany, this has been regulated in detail by law since 1998 in a separate deposit guarantee and investor compensation act (ESAEG) and monitored by the supervisory authority. Pursuant to Section 23a of the German Banking Act (KWG), banks that are not members of a deposit guarantee scheme must make prominent reference to this fact in their business conditions. Since 2009, efforts have been maturing for a uniform EU regulation. – In the case of foreign banks with branches in Germany, the deposit guarantee regulations of the country in which the head office of the bank concerned is located apply in each case. The same applies to online banks and to branches of German banks in other countries. – See deposit guarantee, state, deposit guarantee, European, firefighting fund, Hypo Real Estate rescue, IndyMac bankruptcy, Icelandic bank trap, credit institution, cross-border, market discipline, moral hazard, Northern Rock debacle, pool, feedback mechanism, safeguarding obligation, Single
Master liquidity conduit, overflow system. – Cf. Deutsche Bundesbank Monthly Report of July 2000, pp. 29 et seq. (deposit insurance and investor compensation in Germany, overview), BaFin Annual Report 2007, p. 205 (overview of compensation schemes supervised by BaFin), BaFin Annual Report 2009, pp. 45 et seq. (further harmonization of supervisory standards in the wake of the EU Deposit Guarantee Directive; open issues), pp. 225 et seq. (reform of the German Deposit Guarantee and Investor Compensation Act; increase in contribution rates), BaFin Annual Report 2010, pp. 51 et seq. (draft deposit guarantee directive; redesign of investor compensation; protection systems in the insurance industry), BaFin Annual Report 2012, pp. 65 et seq. (Amendment of the European Deposit Guarantee Directive delayed, reasons for this) as well as the respective Annual Report of BaFin, chapter “International Affairs,” Annual Report 2013 of the Deutsche Bundesbank, p. 40 (Harmonization of European deposit guarantee schemes), Annual Report 2013 of BaFin, p. 45 et seqq. (Fundamental issues, current legal developments; Reform of the Deposit Guarantee Directive).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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