The macroeconomic effects of a European deposit (re-)insurance scheme

Arbeitspapier

Recent proposals for a still missing European deposit insurance scheme (EDIS) argue in favor of a reinsurance framework. In this paper, we use a regime-switching open-economy DSGE model with bank default to assess the relative efficiency of such a scheme. We find that reinsurance by EDIS is more effective in stabilizing real activity, credit, and welfare than a national fiscal backstop. We demonstrate that risk-weighted contributions to EDIS are welfare-beneficial for depositors and discuss trade-offs policymakers face during the implementation of EDIS. We also find that macroprudential regulation and EDIS can complement each other and that EDIS can prevent bank runs under certain conditions.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 1873

Classification and Topics

• Classification: Wirtschaft ; Policy Objectives; Policy Designs and Consistency; Policy Coordination ; International Policy Coordination and Transmission ; Macroeconomic Issues of Monetary Unions ; Insurance; Insurance Companies; Actuarial Studies ; Financial Institutions and Services: Government Policy and Regulation
• Subject: Banking Union ; Deposit Insurance ; Risk-Sharing

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Clemens, Marius ; Gebauer, Stefan ; König, Tobias
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/271658
• Last update: 10.03.2025, 11:42 AM CET