15 September 2021

EBA publishes revised guidelines on the stress tests of deposit guarantee schemes (DGSs)

The revised Guidelines extend the scope of the DGS stress testing, by requiring more tests in comparison with the past Guidelines and by covering all the legal missions entrusted to the DGSs.

• The EBA revised the existing guidelines to further strengthen the stress testing framework of DGSs, harmonise the approaches across Member States, and enhance comparability of test results;
• The revised guidelines require that all DGSs test their abilities to perform all their functions and to access all their funding sources;
• As a result of the revisions, depositors can have greater confidence in receiving their deposits, should their bank fails.

The European Banking Authority (EBA) published today its revised Guidelines on the stress tests conducted by national DGSs under the Deposit Guarantee Schemes Directive (DGSD). The revised Guidelines extend the scope of the DGS stress testing, by requiring more tests in comparison with the past Guidelines and by covering all the legal missions entrusted to the DGSs. The revisions aim to consolidate depositors’ confidence about the ability of their national DGS(s) to promptly repay their funds in case of banking failure. The revised framework also strives to achieve greater harmonisation and comparability of stress test results, which will enable the EBA to carry out a robust peer review of national DGS stress tests in 2025.

The revised EBA Guidelines require DGSs to stress test their ability to perform all the interventions allowed under their legal mandates, and to access all of their funding sources. The cooperation between DGSs and other authorities is also strengthened, by requiring DGSs to stress test scenarios where such cooperation is necessary. In addition, the new provisions encourage the DGSs to stress test scenarios with additional business continuity challenges, such as a pandemic, ICT failures or other similar events.

The revisions of the Guidelines are based on the findings of the first EBA peer review of the DGS stress tests and resilience of national DGSs, which the EBA published in a report in June 2020, where it provided early indications of areas in which the DGS stress testing framework could be improved.

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