The German Deposit Guarantee Act (Einlagensicherungsgesetz) entered into force in July 2015. This act transposes the harmonised provisions of the European Deposit Guarantee Schemes Directive into German law with the intention of strengthening investor protection.¹ The deposit guarantee schemes will in future have to perform stress tests at least every three years, starting in 2017. These tests examine and ensure the resilience and viability of the institutions. In addition, because of the stricter requirements imposed by the act, the German deposit guarantee schemes will have to have set aside funds equivalent to at least 0.8% of the covered deposits by 2024. The German Compensation Scheme Funding Regulation (Entschädigungseinrichtungs-Finanzierungsverordnung) sets out the requirements for financing statutory compensation schemes in more detail. The regulation entered into force on 5 January 2016. Institutions assigned to the statutory compensation schemes paid their first annual contributions in 2016 in accordance with this regulation.

Under the Deposit Guarantee Act, depositor compensation must now be paid within seven working days. Bank customers no longer have to make an application. The protection schemes now also have to meet increased reporting requirements to BaFin. Their member institutions have to provide more comprehensive information to depositors about how they are protected. These obligations also apply to the institutional protection schemes recognised as deposit guarantee schemes of the German Savings Banks Association (Deutscher Sparkassen- und Giroverband) and the National Association of German Cooperative Banks (Bundesverband der Deutschen Volksbanken und Raiffeisenbanken), which have also begun to set funds aside towards their target capital base.

The implementation of the Deposit Guarantee Schemes Directive has also made further progress at the European level. As early as 2015, the European Banking Authority (EBA) developed guidelines on the member institutions' payment commitments to deposit guarantee schemes and on how contributions are levied. In February 2016, it published guidelines on cooperation agreements with the deposit guarantee schemes of other European countries. In addition, in October 2016, it released guidelines on stress tests of deposit guarantee schemes. BaFin was involved in the above processes as a member of the competent working groups.

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