Courtesy of Mish
Last week we investigated nonperforming EU loans and an EU proposal to freeze accounts if a run on a bank starts.
Today let’s investigate the EU’s deposit insurance scheme with the likely result being a ban on cash.
On July 19, with little media publicity, the EU Single Resolution Board issued a statement with this exact title: Press Release – Banking Union – Single Resolution Board collects €6.6 billion in annual contributions to the Single Resolution Fund, now reaching €17 billion in total.
For starters, there is no “banking union” to speak of. That aside, let’s explore the deposit insurance goal and where things are now.
As of 30 June 2017, the Single Resolution Board (SRB) had collected €6.6 billion from 3,512 institutions in annual contributions to the Single Resolution Fund (SRF). In total, the SRF now holds an amount of €17.4 billion.
The SRF pools contributions which are raised on an annual basis at national level from credit institutions and certain investment firms within the 19 participating Member States. These contributions are calculated on the basis of the methodology set out in the Commission Delegated Regulation (EU) 2015/63 and Council Implementing Regulation (EU) 2015/81 and are collected via the National Resolution Authorities (NRAs).
The SRF is being built-up over a period of eight years (2016-2023). The target size is intended to be at least 1% of covered deposits by end 2023. 3,512 institutions banks and investment firms have to contribute to the Fund.
The Goal
That’s the entire press release, as written. The goal is to create an emergency “safeguard” that can only be used as a “last resort”.
The target goal is “at least 1% of assets” and it will take until 2023 to collect this reserve.
SRF vs NPLs
At hand right now the SRF has €17.4 billion in the emergency safeguard.
