Vulnerability of the European Deposit Guarantee Schemes and the Banking Resolution Mechanism
Vulnerability of the European Deposit Guarantee Schemes and the Banking Resolution Mechanism

Summary/Abstract: The new directives of the European Parliament and the European Council issued in 2014 define unified expectations regarding deposit guarantee schemes and banking resolution mechanism to be applied in territory of each EU member state. Moreover, the so called Single Resolution Fund must be implemented by euro zone member states in order to finance the resolution processes. The article introduces the main rules of the unified systems as well as deals with their financial background. It provides evidence for vulnerability of deposit guarantee schemes supposing such situation where clients of a large bank are to be compensated. Furthermore, it proves that the target total asset level of the Single Resolution Fund declared by European Commission is underestimated.

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