EU Parliament’s Decision Threatens Deposit Insurance in Austria: A Warning from the Austrian Economic Chamber, Raiffeisen Association and National Bank

The Raiffeisen Association, National Bank, and commercial banks have issued a joint warning about the potential weakening of the deposit insurance system. This concern stems from a decision made in the EU Parliament, led by rapporteur Othmar Karas (ÖVP), which allows for national deposit insurance funds to be used for resolution cases at a European level. Specifically, half of the funds from national deposit protection funds in Austria, totaling two billion euros, could be transferred to an EU pot if necessary.

While acknowledging the importance of being prepared for times of crisis, Willi Cernko, chairman of the Austrian Economic Chamber (WKÖ), emphasizes the need for a coherent overall concept that significantly improves financial market stability before any decisions are made. The current proposal raises concerns about depositor protection as allowing European resolution authorities access to these funds could undermine the goal of safeguarding depositors’ savings.

Johannes Rehulka, Secretary General of the Raiffeisen Association shares similar concerns and warns against conducting such broad experiments just before the EU elections. Maintaining financial market stability and preserving savers’ trust in functioning systems are paramount and should not be jeopardized without clear necessity. The potential implications of these changes are significant and warrant careful consideration before further action is taken.