Esa Jokivuolle and George P. Pennacch, (2019), “How to design the European Deposit Insurance Scheme”, VoxEU, 31 May
Much of financial regulation has been focusing on adequately pricing risk taking by lenders. This column argues that a multinational deposit insurance system such as the proposed European Deposit Insurance Scheme has important advantages, but can also create conflicts among its member nations due to potential deposit insurance subsidies that differ across nations. The authors suggest alternative design features that could minimise these subsidies and make a multinational deposit insurance system more mutually agreeable.
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