The Planned Reforms of the American and European Deposit Insurance Systems: Similarities and Differences
The Planned Reforms of the American and European Deposit Insurance Systems: Similarities and Differences

Summary/Abstract: Last year, at around the same time, two reforms of deposit insurance systems were announced – one in the UnitedStates and the other in the European Union. The American proposal of the reform was triggered by the bankingcrisis of March 2023 (bank runs and failures) and it was put forward by the Federal Deposit Insurance Corporationin May 2023. In Europe, the European Commission published in April 2023 its legislative proposal to reform thecurrent EU framework for crisis management in the banking sector (including both deposit insurance and bankresolution). The EU proposal for the reform was the culmination of a few years of preparatory work based onpractical experience from the functioning of the EU crisis management framework which is part of the BankingUnion established ten years ago.This article examines key problems that have to be addressed by the proposed reforms as well as potential policyoptions. The American options include various levels of deposit insurance coverage (limited, targeted, unlimited),while the European approach covers changes to resolution scope and funding (slight or substantial) as well as a broadreform including a common deposit guarantee scheme in the Banking Union. The article discusses advantages anddisadvantages of these policy options, presents arguments for and against them, makes an attempt to evaluate theproposed reforms, and indicates how both of the reforms differ from each other and how they are similar.

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