On European deposit protection scheme(s)

The stability of the banking sector has proven to be a crucial requisite for the overall stability of a nation’s economy, particularly in recent years (Wheelock and Wilson 1995; Acharya 2009; Lambert et al. 2015). Financial safety nets are systems of legislative measures put in place to guarantee banks’ stability (Demirgüç-Kunt and Huizinga 1999, 2004); one of the most relevant actors of a national safety net, along with the prudential regulator, the lender of last resort and the supervisory authority is the deposit protection scheme (DPS) (Laeven 2002; Schich 2008). This contribution provides an analytical overview of the DPSs set-up in the European Union Member States and investigates the level of harmonisation reached by the DPSs within the EU28. It furthermore analyses the main features of the DPSs' funds and investigates whether the way their features are combined may influence their prevailing effect (stabilising or risk-seeking) on the banking sector stability.