Evaluation of the alternatives of the European Deposit Insurance Scheme

Thumbnail Image

Files

master_Torda_Adam_2017.pdf (851.27 KB)

URL

Journal Title

Journal ISSN

Volume Title

School of Business | Master's thesis
Unless otherwise stated, all rights belong to the author. You may download, display and print this publication for Your own personal use. Commercial use is prohibited.

Authors

Date

2017

Department

Taloustieteen laitos

Major/Subject

Mcode

Degree programme

Economics

Language

en

Pages

71

Series

Abstract

The Banking Union, the Economic and Monetary Union's main reform during the recent crisis, is still unfinished without its third pillar, the European Deposit Insurance Scheme. The first two pillars have already ensured that the supervision and resolution of the banks are on the European level. However, the common deposit insurance is still a necessary element to fulfill the Banking Union's objective, to plausibly break the negative feedback loop between sovereigns and their domestic banking sector. This reform, to effectively protect the depositors in the euro area, was put on hold because of the fear of many European member states that it would induce moral hazard and excessive risk-taking. Moral hazard in this setting means that both the member states and banks interests and behavior may change in an undesirable way since the cost of bank failures will be socialized. In my thesis, I analyse the most favorable, but still attainable options of the European Deposit Insurance Scheme, and the ways to mitigate its drawbacks. In the analysis, I suggest feasible alternatives, necessary measures to lessen moral hazard, and inevitable fiscal back-stops to ensure the credibility of a common scheme.

Description

Thesis advisor

Haaparanta, Pertti

Keywords

banking regulation, banking, European Deposit Insurance Scheme, EDIS, national deposit insurance, moral hazard, fiscal back-stop

Other note

Citation

Permanent link to this item

https://urn.fi/URN:NBN:fi:aalto-201805082099

Collections

[gradu] Kauppakorkeakoulu / BIZ