The European Commission will table proposals for an EU-wide deposit protection scheme by the end of 2015.
Lord Hill, the European Commissioner for financial services, said it would effectively be a reinsurance scheme for national deposit protection systems.
He said: “It will supplement national deposit guarantee schemes and provide funding when national schemes are unable to handle large local shocks.
“This will help to break the link between banks and national governments, and reduce the risk of instability across the Banking Union.”
The deposit protection scheme will be the third pillar of the Banking Union, established after the financial crisis, with the other two being the single supervision mechanism and the single resolution mechanism.
Background
Under the Deposit Guarantee Schemes Directive, savings are nationally guaranteed up to a limit of the sterling equivalent of EUR100,000.
In July, the Prudential Regulation Authority announced the reduction from £85,000 to £75,000 at the start of next year because the value of the pound sterling has increased.
Andrew Tyrie, the chairman of the Treasury Select Committee, said this was “absurd” and called for action.
