All you need to know about deposit guarantee scheme

It is the third pillar of banking union.

As I already stated the banking union is composed of three pillars:

-The single supervision mechanism,

-The single resolution mechanism,

-The deposit guarantee scheme.


The single supervision mechanism is a multi-level supervision system at european level. It is composed of the european central bank and national competent authorities.

The single resolution mechanism is secured by single resolution Board, the commission and council.


It centralises decisions related to resolution and application of banking recovery and resolution directive at the european level .

The deposit guarantee scheme protect depositers in case of insolvency of credit institution.

Moreover, it is used to repay depositors.

It is used also to avoid failure of a bank and avoid reimbursement of depositors.

Deposit guarantee scheme assit also in financing the resolution of credit institution.

The level is set to 100,000 per depositor. According to directive, they should refund the depositor within seven days.

All you need to know about European legislation on banks:

The banking regulation at european level is very important.

It regulates a strategic sector. The European legislation on banks aims to avoid systemic risk. It also ensure the stability of the financial system. There is a huge number of banks in Europe around 6000 banks. Enuropean legislation ensure the smooth functionning of the union market too.

But who handles regulation at european level. The European Supervisory Authority regulate european legislation on banks.


The bodies of the european supervisory authority (ESA) are:


*The european banking authority,

*The european securities and markets authority.

*The european insurance and occupational pension authority.


The european banking authority ensures the european legislation on banks.

The european supervisory authority elaborates the common rules.

The european supervisory authority elaborates the common supervisory practice.

The common rules are also called the rulebook. The common supervisory practice are also called the handbook.

The european supervisory authority provides also opinions, guidelines and recommendations to european institutions.

It also drafts standards. The standards becomes binding acts after approval of the european commission.

The commission may endorse the standard in part.

We went through all sources of legislation on banks at european level in this article.

As you can see the european supervisory authority throught the european banking authority is the main source of legislaton for european banks.

Its mains tasks are:

*Drafting standards,

*Issuing recommendation,

*Issuing guidelines

*give opinions about european institution.

The commission approve draft standards totally or partially.

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