April 1, 2019 / 6:10 AM / 23 days ago

EU watchdog SRB sees bigger role for deposit guarantee schemes in banking crisis

MILAN, April 1 (Reuters) - Deposit guarantee schemes should be able to finance the transfer of deposits from an ailing bank to another lender, the Single Resolution Board’s (SRB) chief Elke Koenig said in an interview with an Italian paper on Monday.

She added similar measures and the “least-cost test” threshold should be further discussed in order to achieve a common European system, an idea shared with several central bank governors including Italy’s Ignazio Visco.

Koenig cited the United States, “where the Federal deposit insurance plays a role not only of rescue but also of asset reallocation and reorganisation of the financial system.”

A court ruling which overturned an EU decision over the rescue of Italy’s Tercas bank in 2014 has opened the way for a discussion on the role of deposit guarantee schemes beyond their core function of protecting savers of collapsing banks. (Reporting by Maria Pia Quaglia Editing by David Holmes)

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