Finns are aware of deposit protection – but the European deposit insurance scheme must not be rushed

According to a survey by the Finnish Financial Stability Authority, more than half (56%) of Finns are aware that Finland has a statutory deposit guarantee scheme. The scheme ensures that Finnish depositors can get their money back even if their bank goes bankrupt. Nearly as many (54%) also knew the maximum protected amount, which is €100,000.

Veli-Matti Mattila, chief economist at Finance Finland, says the results show Finns have a rather good understanding of the national deposit guarantee system. “Finnish banks have diligently collected funds into the deposit protection system for more than 20 years. It is important that people are aware of this.”

The size of the deposit guarantee fund accumulated over the years substantially exceeds the target level specified in the EU Deposit Guarantee Schemes Directive.

Mattila emphasises that the trust gained in the eyes of the public should not be undermined by rushing the European Deposit Insurance Scheme (EDIS).

”There are still many banks in Europe, mostly small ones, that are not financially in a good shape. Finland has been right in demanding risk reduction before additional risk sharing is even considered. As long as any part of the European banking sector remains unhealthy, the current system of national deposit guarantee schemes is the better choice for Finns.”

According to the survey, the maximum compensation of €100,000 covers the majority of Finnish depositors; only 3% of the respondents reported having more than €100,000 on a bank account. A fifth (19%) had more than €20,000, and a third (29%) of the respondents had no more than 1,000€ on their account.

At the beginning of 2020, a legislative amendment reduces the payout period for deposit guarantee compensations to seven working days. This is something Finns aren’t yet well aware of. In the survey, most respondents assumed the money would take a long time to arrive: 76% guessed it would take at least a month, 58% assumed more than half a year. The Financial Stability Authority comments that these impressions are a reflection of the past, when banking crises were first subject to long-lasting scrutiny.

The survey was conducted by TNS Kantar in July 2019. It gathered responses from 1,032 Finns, aged 18–79, who have a bank account.

Financial Stability Authority: More than half of Finns are aware of deposit protection

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Financial and Prudential Regulation

Veli-Matti Mattila

Director, Chief Economist