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21 May 2021

Better Finance: EC public consultation on the crisis management and deposit insurance (CMDI) framework

Better Finance feedback on why it's important for retail users to make sure there is adequate depositor protection shielding them from the effects of bank failures.

In your view, has the current CMDI framework achieved the f o l l o w i n g  o b j e c t i v e s ?

1) The framework per se represent a considerable progress to the pre-2010 and 2008 situations (when
depositors were not protected at all) but it has not been tested - fortunately - so far. As such, assessments
must rely on academic and statistical evaluations.
2) The framework provided an important first step in taking preventive action and limiting recourse to public
funding, but it is not fully harmonised as there are still instruments at national level that can be used in case
of a faliling or likely to fail bank. In absence of a fully functional, self-standing deposit insurance framework -
eliminating other avenues to be used at national level - the recourse to taxpayers' money cannot be truly
3) The level of protection for depositors is still low and, due to divergences in its implementation, the
necessary capital buffers have not been constitued everywhere the same. According to EBA data, only 13
out of 36 deposit guarantees at national level comply with their respective thresholds (available amount as a
% of the covered deposits). Moreover, there is still a significant part of deposits (from individuals and
businesses) that are not afforded protection. Out of the DGSs that have not reached their thresholds, many
of them are far away from reaching it (e.g. currently 0.2% out of 0.8%).
4) No opinion/don't know
5) No opinion/don't know
6) As explained for the first question, the framework does represent important progress, which implies
increased legal certainty and predictability. However, the numerous instruments parts of the CMDI at EU
level, combined with those available at national leval, and the complex web of supervisory and intervention
powers and authorities, shows there still is work to be done.
7) No opinion / don't know

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