Yesterday, the European Parliament announced its endorsement of a Commission proposal to amend Directive 94/19/EC, which sets deposit coverage at €20,000 (with the option for Member States to determine higher coverage levels), to increase bank deposit guarantees up to €100,000. The Commission had initially presented the proposal to Parliament in October at the onset of the financial crisis. The amendment still remains subject to approval by the Commission and is scheduled to take effect by year end in 2010, although Member States will be required to bring the legislation into force by June 30, 2009, unless “a Commission impact assessment, to be ready by 31 December 2009, suggest it is not financially viable for all Member States.”

Under the amendment, Parliament has “reduce[d] the payout period, in the event of deposits being unavailable, from three months to 20 days. The extension of this period, up to maximum 10 days, could only be admitted in exceptional circumstances and by approval of competent authorities.” The Parliament has also called upon “Member States to consider setting up an emergency pay-out system to make appropriate amount available to the depositor within three days or less. The objective is to make ‘a positive impact on the confidence of depositors and the proper functioning of the financial markets.’”