FFI opposes the common deposit insurance scheme proposed by EU leaders

The Federation of Finnish Financial Services (FFI) opposes the common deposit insurance scheme proposed by five Presidents of EU institutions. Finnish politicians across the party spectrum are also averse to the idea. In an FFI survey, more than 70 percent took a negative stand on the proposal, and 36 percent of said respondents were even extremely critical.

The Presidents of EU institutions have prepared a report in which they propose the launching of a European Deposit Insurance Scheme (EDIS) that would compensate depositors’ funds in the event of a bank’s insolvency. One possible option would be to base the scheme on the principle of reinsurance. The report urges that the EDIS should be established quickly, utilising the possibilities of existing legislation.

According to Veli-Matti Mattila, FFI chief economist, the Finnish Deposit Guarantee Fund’s assets must be only used to cover Finnish depositors. Finland has been building its national deposit guarantee scheme already since the late 1990s. About one billion euros have been collected from Finnish banks – an amount which significantly exceeds the target level required by the EU Deposit Guarantee Schemes Directive. Currently the guarantee schemes of individual euro countries greatly differ in the amount of funds they have collected from banks.

“The Finnish financial services sector is in favour of the harmonisation of all euro area deposit guarantee schemes, but opposed to a common scheme. We do not want to increase the joint liability of banks – and ultimately of their customers – any further. Finnish credit institutions already incur a cost of more than one billion euros from the Single Resolution Fund”, Mattila says.

The report proposing a European Deposit Insurance Scheme was prepared by Jean-Claude Juncker (President of the European Commission), Donald Tusk (President of the Euro Summit), Jeroen Dijsselbloem (President of the Eurogroup), Mario Draghi (President of the European Central Bank), and Martin Schultz (President of the European Parliament). The report is titled “Completing Europe’s Economic and Monetary Union”.It will be discussed at the European Council meeting held in Brussels on 25–26 June.

Read the report: Completing Europe’s Economic and Monetary Union

Further information:
Veli-Matti Mattila, Chief Economist +358 20 793 4259
Marjo Lapatto, Communications Manager, +358 20 793 4274