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EC chiefs plan bank guarantee for Europe

SAVERS should have their deposits guaranteed against bank default by an EU-wide scheme by mid-2017, top EC leaders will propose today.

EU states are already obliged to protect bank deposits up to €100,000 but with several credit institutions underperforming and growing fears of Greece defaulting, this guarantee may not be enough.

To prevent European taxpayers from being forced to rescue banks as happened after the financial crash of 2008, European Commission President Jean-Claude Juncker, in a report prepared with European Central Bank chief Mario Draghi, has proposed a European Deposit Insurance Scheme (EDIS).

Banks would fund EDIS, adding to the levies already imposed on European credit institutions to set up a bank bailout facility, known as the Single Resolution Fund (SRF).

The proposal, part of a report to be reviewed by EU leaders this week, includes changes to the SRF so that it could benefit from a backstop provided by the €500bn eurozone bailout fund until 2024, when the SRF target capital of €55bn is expected to be fully covered by banks.

The eurozone bailout fund, know as the European Stability Mechanism, would provide emergency loans to the SRF in case its capital proved not enough to bail out a bank.

Irish Independent