The proposed European Deposit Insurance Scheme, which would protect savings accounts of up to 100,000 euros, or $106,000, is intended to shore up confidence in the eurozone after a wave of crises nearly sank the shared currency early this decade.
As the Federal Deposit Insurance Corporation does for savers in the United States, the European program would aim to ensure that all depositors across the 19 countries using the euro could be equally confident that their savings were safe. The system, which would supplement and should eventually replace national deposit insurance programs, would not fully take effect until 2024.
The proposal could face opposition from Germany, which has long resisted sharing fiscal risks with other eurozone countries. The European Parliament and a majority of 28 member states would also need to give their approval.
Speaking at a news conference in Strasbourg, France, Jonathan Hill, the European commissioner for financial services, who made the proposal, said it should be possible to overcome concerns about risk.
“The crisis revealed the weaknesses in the overall architecture of the single currency,” said Mr. Hill, who is British. “We need to make sure that risk reduction goes hand in hand with risk sharing.”
The proposal would not change protection for individual savers from the current level of €100,000. That guarantee was reaffirmed last year partly to ease concerns after the eurozone agreed to tax-insured deposits in Cyprus in 2013 as part of a bailout of the country’s banking sector. The plan to tax Cypriot depositors was scrapped, but it shook confidence among savers across the Continent.
What would change under Mr. Hill’s plan is how deposit insurance is funded. Starting in 2017, eurozone depositors would be able to draw from the European fund — but only once national insurance funds were fully depleted. After 2020, depositors would be able to retrieve steadily larger amounts of European money as part of what European Union officials called a “progressively mutualized system.” By 2024, a European fund amounting to about €43 billion would fully guarantee deposits across the eurozone.
To fund the system, all banks in the eurozone would contribute a total of about €6.8 billion each year, starting next year. Mr. Hill said those contributions would be deducted from what the banks already pay into national insurance programs. Banks deemed more risky by the European authorities would need to make proportionately larger contributions.
Banks from European Union states that do not use the euro, including Britain, could participate in the program but would not be required to do so.
The European Banking Federation, an industry body, said the proposal “requires careful examination.” It warned that the plan should “not lead to increases in overall contributions that banks make to deposit guarantee systems.”
The authorities in Brussels began putting in place overhauls at the beginning of the decade after problems in the American housing market and the discovery of a big hole in Greece’s finances set off a broader European banking crisis that led countries to use huge amounts of public money to bail out their troubled lenders.
A common framework for supervision of big eurozone banks that went into force last year, and a law giving the European Union a common rule book for handling failing banks, have been put into effect by most member states. A system to share the risk of covering deposits “is the big missing element,” Mr. Hill said.