"Europe can act quickly, effectively and ambitiously" says Lib Dem MEP (Wantage and Didcot Liberal Democrats)

Wantage and Didcot Liberal Democrats <info@wantagelibdems.org.uk>

"Europe can act quickly, effectively and ambitiously" says Lib Dem MEP

February 14, 2009 5:52 PM

Sharon Bowles MEP

Sharon Bowles, MEP for South East Region and Liberal Democrat Economic Spokesperson, hailed this week's vote on Deposit Guarantee Schemes in the European Parliament as proof that Europe can act "quickly, effectively and ambitiously".

The Deposit Guarantee Scheme Directive proposes raising the coverage level for depositors in the event of a bank collapse, from the current minimum of €20,000 to €100,000 by the end of 2010. Additionally, the delay of payment compensation for depositors has been reduced from 9 months to 35 working days. Thanks to work by MEPs, the proposal also encourages national governments to provide emergency payouts for depositors and to emphasise continuity of banking which can keep a bank functioning and therefore, maintain depositor's access to funds.

Commenting, Sharon said: "This directive marks a vast improvement for ordinary depositors, injecting confidence into the system in the midst of the financial crisis. The knowledge that deposits of up to €100,000 will be guaranteed by governments will help avoid bank runs such as those seen outside branches of Northern Rock. The European Parliament, Commission and Council have worked closely together and within 9 weeks secured a deal. This has shown that Europe can act quickly, ambitiously and effectively in dealing with problems that effect all of us."

However in her speech to Parliament, Sharon warned that there was still room for improvement: "The timeframe of payouts has been agreed at 35 days. This is longer than was hoped and leaves citizens without access to funds for some length of time. Whilst committing the Commission to investigate provision for higher protection for temporary increased balances, I am disappointed not to get an unreserved commitment at this stage. For example, if a constituent has recently sold their house and needs to temporarily bank this money, this will only be protected to the minimum. These kind of unhappy losses were seen following the collapse of the Icelandic banks. We need to learn from these events by ensuring that we have in place special protections so that people can not loose lifetime funds."