BRUSSELS (AFP) — The European Union is considering a shake-up of deposit guarantee rules in order to boost savers' confidence in the crisis-struck banking system, European Commission chief Jose Manuel Barroso said Wednesday.
The often huge discrepancies between deposit guarantee schemes across the 27-nation EU have come into focus after Ireland announced on Tuesday plans to provide unlimited guarantees for deposits held at its six biggest banks.
Outlining measures to be included in Europe's response to the current financial crisis, Barroso said: "We need to improve the consistency of deposit guarantee schemes."
Currently some EU countries offer much greater protection of depositors' savings than neighbouring countries in the bloc.
EU law currently requires member states to provide deposit insurance of at least 20,000 euros (28,000 dollars).
Until Ireland sought to boost confidence in its banking system with its measures, Italy provided the most generous protection to savers with guarantees of up to 103,000 euros of money deposited.
Most other European governments guarantee far less and many cover only the 20,000-euro minimum.
However, as the financial crisis has engulfed European banks and shaken confidence in the banking system, some governments have raised the possibility of doing more.
Before Belgian-Dutch group Fortis was bailed out to the tune of 11.2 billion euros over the weekend, Belgian Finance Minister Didier Reynders insisted "we will not leave any client in Belgium in difficulty."
Likewise French Prime Minister Francois Fillon sought to assure bank customers, insisting on the "state's absolute guarantee" in an interview with Les Echos business newspaper on Wednesday.
"French banks are not insulated from difficulties if a large European bank collapses," he said. "For that reason, we are assuring the French people of the state's absolute guarantee of the French banking system."
Barroso said that EU countries were considering the possibility of a joint system for protecting deposits.
He said the idea "is one of the questions we are discussing with the French presidency (of the EU) and with others in order to reach an agreement on a joint system, a joint mechanism or cooperation between the different systems."
In a proposed update to banking regulations and oversight, the commission said that it was looking at ways of harmonising deposit schemes in Europe.
"In order to bolster depositors' confidence, the commission is planning further improvements, especially with regard to the speed of payouts and levels of coverage," the EU's executive arm said in a statement.
EU Internal Markets Commissioner Charlie McCreevy said that under the US deposit guarantee scheme, payouts are made within 48 hours whereas in Europe the process can take "anything up to three to six months."
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