ECB Ends Covered Deposit Protection, Free Withdrawal

In a move that may wrinkle some noses, the European Central Bank (ECB) has announced that they will no longer be offering protection for covered deposits and that withdrawals will be limited when a bank is on the verge of failure. According to the posting:

“Covered deposits and claims under investor compensation schemes should be replaced by limited discretionary exemptions to be granted by the competent authority in order to retain a degree of flexibility.”

Currently deposits of €100,000, which are protected in the event of a bail-in would no longer receive that protection. However, this issue is not the most substantial. The report also suggests that banks would be able to limit depositors’ access to their own funds. According to the report: […]

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