On 11 March 2021, the European Banking Authority (EBA) issued a public consultation on revised guidelines on the stress tests conducted by Member State deposit guarantee schemes (DGSs) under the Deposit Guarantee Schemes Directive (DGSD). The proposed revision to the guidelines will extend the scope of DGS stress testing, by requiring more tests that will cover additional aspects of DGS interventions. The proposed framework will also achieve greater harmonisation and comparability, to enable the EBA to carry out a robust peer review of national DGS stress tests in 2024/25.
The amendments proposed in the revised guidelines are designed to:
- Require DGSs to stress test their ability to perform all of the interventions they are legally mandated to perform, including reimbursing depositors, contributing to resolution, and, depending on national law provisions, to failure prevention and to insolvency proceedings. The current guidelines only require stress testing DGSs’ ability to reimburse depositors.
- Require DGSs to stress test their ability to have access in due time to all of their funding sources, including extraordinary ex post contributions and alternative funding arrangements, such as a credit line. The ability to raise these resources should be tested irrespective of the amount of available ex ante funds collected by the DGSs.
- Strengthen the cooperation between DGSs and different authorities by requiring to stress test interventions where cooperation with other authorities is necessary. The proposed revised guidelines specify how to assess the arrangements in place between DGSs and public authorities for obtaining information on problems detected at a credit institution that could give rise to DGS intervention. They also require DGSs to share the results of the DGS stress tests upon other authorities’ request.
- Encourage DGSs to choose stress testing scenarios with additional business continuity challenges or external circumstances that create extra stress for the DGSs to perform their functions, such as a pandemic, ICT failures, or other such events.
- Provide a more comprehensive, clear and harmonized template for recording and submitting the results of the stress tests to the EBA. The revised template puts more emphasis on reporting areas for improvement identified by a DGSs in the course of the execution of the stress tests. The deadline for the DGSs to submit their next reporting template is set on 16 June 2024.
The deadline for comments on the consultation is 11 June 2021.