Deposit insurance after Iceland and Cyprus
Depositors in Eurozone banks are facing a steep learning curve on just exactly what deposit insurance means. This column points out that the precedents set in Cyprus and Iceland show that deposit insurance is only a legal commitment for small bank failures. In systemic crises, these are more politic...
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| Format: | Article in Journal/Newspaper |
| Language: | unknown |
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Centre for Economic Policy Research
2013
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| Online Access: | https://eprints.bbk.ac.uk/id/eprint/9636/ http://www.voxeu.org/article/deposit-insurance-after-iceland-and-cyprus |
| Summary: | Depositors in Eurozone banks are facing a steep learning curve on just exactly what deposit insurance means. This column points out that the precedents set in Cyprus and Iceland show that deposit insurance is only a legal commitment for small bank failures. In systemic crises, these are more political than legal commitments, so the solvency of the insuring government matters. A Eurozone-wide deposit-insurance scheme would change this. |
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