EU works to protect bank savings

4.07.00pm GMT Thu 18th Dec 2008

London Liberal Democrat MEP Sarah Ludford has hailed today's vote on deposit guarantee schemes in the European Parliament as proof that Europe can act "quickly, effectively and ambitiously".

The new EU Deposit Guarantee Scheme Directive proposes raising the coverage level for depositors in the event of a bank collapse, from the current minimum of €20,000 to a level of €100,000 (around £90-100,000 on current exchange rates) by the end of 2010. Additionally, the delay of payment compensation for depositors has been reduced from 9 months to 35 working days.

Thanks to work by MEPs, the proposal also encourages national governments to provide emergency payouts for depositors and to emphasise continuity of banking which can keep a bank functioning and therefore, maintain depositor's access to funds.

Sarah Ludford said:

"This directive marks a vast improvement for ordinary depositors, injecting confidence into the system in the midst of the financial crisis. The knowledge that deposits of up to €100,000 will be guaranteed by governments will help avoid bank runs such as those seen outside branches of Northern Rock.

"The European Parliament, Commission and Council have worked closely together and within 9 weeks secured a deal. This has shown that Europe can act quickly, ambitiously and effectively in dealing with problems that affect all of us."