The European Banking Authority (EBA) has published a consultation paper on draft guidelines on stress tests of deposit guarantee schemes (DGSs) under the recast Deposit Guarantee Schemes Directive (DGSD).

Under the DGSD, DGSs are required to perform stress tests of their systems every 3 years to verify whether their operational and funding capabilities are sufficient to ensure deposit protection within the conditions of the DGSD in times of increased pressure.

The EBA’s proposed guidelines will:

  • require DGSs across the EU to establish a programme of tests over a period of two to five years, covering specific scenarios and indicators;
  • provide the methodological principles to assess whether the operational and funding capabilities of DGSs are sufficient to ensure deposit protection in the event of a bank failure;
  • promote the quality and the consistency of the stress tests; and
  • provide the broad types of intervention scenarios to be tested as well as the key areas to be assessed.

The first stress test is to occur by 3 July 2017. DGSs will be requested to run a number of priority tests and to report the results to their own competent authorities and the EBA by 3 July 2019. This will in turn enable the EBA to deliver its first peer review in 2020.

View EBA consults on stress tests for deposit guarantee schemes, 6 November 2015