Brussels wants to protect deposits of up to 500,000 euros in exceptional cases

every time bank bankrupt, trembling Financial system and, above all, saversin case the crisis ends up affecting them deposits and current accounts. In order to maintain confidence and financial stability, among other mechanisms there are systems or Deposit guarantee funds. These funds, which are financed only by contributions from banks, they currently cover up to 100,000 euros per depositor and bank account — until the financial crisis of 2008, only 20,000 euros were covered in Spain and Europe.

The guarantee that you will get your money back even if the bank goes bankrupt prevents mass withdrawals of deposits and their consequent financial instability. But the assessment carried out by the community authorities shows that there is legal certainty and predictability in governance bank failures they are still insufficient and that depositor protection remains uneven and inconsistent between member states.

So, Brussels has proposed extending protection to temporarily high balances in bank accounts associated with certain life events, e.g inheritance, insurance claims wave sale of homes.

In particular, it is pointed out that it is “necessary” to adjust the deposit protection to a minimum of 500,000 euros in a coordinated period of six months, with a coverage level of 100,000 euros. For example, when the house is sold and the amount has just been paid or for insurance collection. The current directive obliges states to guarantee that deposits resulting from these events are protected in an amount greater than EUR 100,000 for at least three months, but not longer than twelve. The commission explains that, given that during a real estate transaction, funds may pass through different accounts until the transaction is settled, the protection of temporarily high balances should be applied to both sales proceeds and funds deposited for the purchase of real estate, short-term housing.

In addition, it extends the protection of depositors to public entities (schools, hospitals and municipalities).

During the return of funds to depositors, Deposit Insurance Funds may encounter problems money laundering. For this reason, the regulation establishes that payment must be withheld from depositors when they are notified that a financial intelligence unit has suspended a bank or payment account in accordance with applicable anti-money laundering regulations.

The costs for banks and national authorities of the new measures would be very limited, it is stated in European Comission.

The European Parliament and the Council will now discuss this legislative package. We will continue to wait for the banking union to be completed and for the third pillar to be established: the European Deposit Guarantee Scheme. So far, Germany remains opposed to the extension of joint guarantees to taxpayers of the twenty-seven.