Video: Wednesday, 20 January 2016

To improve financial stability the EU now supervises the largest banks. It has also created more possibilities to save banks from falling over and disrupting the entire Eurozone. Still, our Banking Union is missing one thing to make it really integrated and stable, Dirk Schoenmaker argues. He is the new professor of Banking and Finance at Rotterdam School of management, Erasmus University (RSM). In this opinion piece Schoenmaker explains why we need to go ahead with the proposals for a European Deposit Insurance. This would guarantee that our savings would be safe in times of banking trouble, no matter where in Europe that bank would be.

The long view: "European Deposit Insurance necessary for economic stability"

“Banks came in big problems during the financial crisis. The challenge is to create a stable banking system for Europe. Businesses need a loan from a bank to do new investments. Consumers need a mortgage to buy a house. Good provision of provision of credit is very important for the economy.”

Consumers are happy to move their savings to other European banks, if they can trust them and the deposit insurance behind it.


“I worked at the Ministry of Finance and at the Central Bank in England. During this period I have learned two things. It is important to prevent banking problems emerging. If they happen anyway, then you need to organise cooperation between authorities in advance, because during a crisis authorities take a national, narrow view when they deal with cross-border banks.”

Game theory

“In my research I use models from the literature of game theory to study cooperation between parties. These models show very clearly that you need to organise cooperation in advance and you need to have a binding agreement.”

European Deposit Insurance

“Now we have a banking union. Banking supervision of cross-border banks is done by the European Central Bank, which takes an overall view and this creates a stable banking system. The last missing piece is a European Deposit Insurance. Consumers are happy to move their savings to other European banks, if they can trust them and the deposit insurance behind it. So European Deposit Insurance would complete the Banking Union.”

prof.dr. D. (Dirk) Schoenmaker
Professor of Banking and Finance
Rotterdam School of Management (RSM)
Erasmus University Rotterdam
Dirk Schoenmaker
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