Deposit Insurance and Financial Markets Supervision in Germany - PowerPoint PPT Presentation

Loading...

PPT – Deposit Insurance and Financial Markets Supervision in Germany PowerPoint presentation | free to view - id: 1aab0a-ZDc1Z



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

Deposit Insurance and Financial Markets Supervision in Germany

Description:

Financing on a mixed ex ante / ex post basis. Debated: an individual right to protection? ... Strong de facto influence on prudential regulation and crisis management ... – PowerPoint PPT presentation

Number of Views:39
Avg rating:3.0/5.0
Slides: 13
Provided by: jenshinri
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Deposit Insurance and Financial Markets Supervision in Germany


1
Deposit Insurance and Financial Markets
Supervision in Germany
  • Presentation at the IADI Third Annual Conference,
    Brunnen
  • 26-27 October 2004
  • Dr. Jens-Hinrich Binder, University of Freiburg
    and IFLU
  • Contact Jens-Hinrich.Binder_at_jura.uni-freiburg.de

2
Deposit Insurance in Germany
  • Introduction
  • A note on the German banking system
  • The regulatory framework
  • The evolution of deposit insurance within Germany
  • The Private Banks Deposit Insurance Fund in
    particular
  • Conclusions

3
A note on the German banking system
  • Key characteristics
  • Strong competition in the retail markets
  • Strong position of Public Savings Banks and
    Cooperative Banks
  • Commercial Banks group
  • Four large banks (Deutsche, Dresdner, Commerzbank
    and HypoVereinsbank)
  • Numerous regional and small private banks
  • Insolvencies in the past confined to commercial
    banks

4
The regulatory framework
  • Prior to 2002 Functions-based financial
    supervision at Federal and Länder level
  • Federal Banking Supervisory Authority
  • Federal Securities Supervisory Authority
  • Federal Insurance Supervisory Authority
  • Decentralised Exchange Supervisory Authorities
  • From 2002 Single Financial Supervisory Authoriy
    (Bundesanstalt für Finanzdienstlei-stungsaufsicht)
  • As a result of a merger of the three Federal
    bodies
  • while exchange supervision continues to be local.

5
The rationale for reform
  • The need to redefine the Bundesbanks position
    within the regulatory framework
  • versus
  • Increasing cross-sector activities between
    financial services providers
  • The UK model as a standard
  • Reform primarily institutional with no major
    amendments to the existing legal framework

6
Methods of supervision
  • Discretionary powers under the Banking Act
    (orders) and (directions)
  • Administrative moratorium to be imposed by
    supervisory authority in case of insolvency (
    46a Banking Act)
  • Various rule-making powers under the applicable
    laws

7
The Evolution of Deposit Insurance
  • The Deposit Insurance Fund
  • A subsidiary of the Private Bankers Association
  • Established in 1969 first scheme in Europe
  • Reinforced in the aftermath of Herstatt
    insolvency
  • Complemented by mandatory arrangements as a
    consequence of transposition of the EC Deposit
    Protection Directive

8
The Private Banks Deposit Insurance Fund
  • Membership voluntary, but most private banks
    participate
  • Restrictive entry and membership criteria
  • Supervision by Auditing Association of German
    Banks
  • Significant role in the detection of financial
    crises
  • Financing on a mixed ex ante / ex post basis
  • Debated an individual right to protection?

9
The Deposit Insurance Fund (contd)
  • The Funds mandate
  • Either payout of insured deposits
  • or financial assistance to insolvent
    institutions.
  • Generous level of protection
  • All deposits of non-banks
  • up to 30 per cent of banks liable capital per
    depositor

10
Additional Schemes
  • Compensation Scheme of German Banks
  • Responsible for the provision of minimum
    protection required by EC law
  • Less important than Deposit Protection Fund, for
    most banks continue to participate in the Fund
  • Compensation Scheme for Public Banks
  • Institutional assistance schemes for Cooperative
    Banks

11
Conclusions
  • The Deposit Insurance Fund as a unique model
  • Deviations from international best practice
  • Independent body
  • Strong de facto influence on prudential
    regulation and crisis management
  • Virtually unlimited protection
  • Seems to avoid adverse incentives
  • Tailored to the specific market structure.
  • No interrelation with single financial supervisor.

12
Thank you for your attention!Dr. Jens-Hinrich
BinderContact Jens-Hinrich.Binder_at_jura.uni-frei
burg.de
About PowerShow.com