Deposit insurance after Iceland and Cyprus

• Main Author: Sibert, Anne
• Format: Article in Journal/Newspaper
• Language: unknown
• Published: Centre for Economic Policy Research 2013
• Subjects: Economics; Mathematics and Statistics; Iceland
• Online Access: https://eprints.bbk.ac.uk/id/eprint/9636/; http://www.voxeu.org/article/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 political than legal commitments, so the solvency of the insuring government matters. A Eurozone-wide deposit-insurance scheme would change this.