Deposit guarantee for personal customers
In order to respond to the financial crisis, the European Commission announced on 15 October 2008 that it was amending the directive on deposit guarantee systems. Specifically, it concerns the following:
- immediate increase in the cover of deposits from 20,000 euro to 50,000 euro, and within a year, to at least 100,000 euro;
- abolition of the co-insurance (i.e. that Member States themselves can decide that the deposit guarantee only covers 90% of the amount of savings balances);
- cutting of the time taken to pay out depositors from approximately 3 months to 3 days.
The Member States of the European Union must implement this directive in their national law. In Belgium, a law was adopted on this European directive on 15 October 2008, and on 17 November 2008, the relevant Royal Decree granting assent was published in the Belgian Law Gazette. The deposit guarantee was raised to 100,000 euro. The Royal Decree came into effect on the date of publication in the Belgian Law Gazette, i.e. on 17/11/2008.
“Having regard to the current turmoil on the financial markets, it is necessary to take measures in order to safeguard confidence in the financial system, and in particular to protect savers. Therefore, this decree provides for the increase, from 20,000 EUR to 50,000 EUR, of the amount of compensation that […] can be paid by the Protection Fund for deposits and financial instruments to certain categories of customer in the event of default by a financial institution or an investment fund.
It is appropriate to provide a similar protection rule for the holders of insurance products which are subject to Belgian law and belong to branch 21 […]. Deposits with participants in the Special Protection Fund for deposits and life insurance are protected by this fund for the second tranche of 50,000 EUR, which is protected in addition to the first tranche of 50,000 EUR for deposits and financial instruments. So deposits are covered by a guarantee of a total of 100,000 EUR.
This decree comes into effect on the date when it is published in the Belgian Law Gazette.”
Sources:
- European Commission: Citizens' summary: To an improvement of depositor protection
- 15 October 2008 - Law on measures to promote financial stability and in particular, to set up a state guarantee for loans granted and other transactions in the context of financial stability (published in the Belgisch Staatsblad on 17/10/2008)
- 14 November 2008 - Royal Decree implementing the Law of 15 October 2008 on measures to promote financial stability and in particular, to set up a state guarantee for loans granted and other transactions in the context of financial stability, with regard to the protection of deposits and life insurance, and amending the la of 2 August 2002 on regulation of the financial sector and financial services (published in the Belgisch Staatsblad on 17/11/2008)
