Cyprus to adopt bank guarantee schemes by the end of October.

A EU directive on bank deposit guarantee schemes is expected to be transposed into the island's legislation by the end of the month as Cyprus faces hefty fines if it continues to delay its approval.

According to Demetris Lysandrou, State Law Office official, the directive should have been approved by last July and that Cyprus has already received a warning over the delay.

Directive 2014/49 effectively updates the original deposit guarantee schemes directive adopted in 1994. The Council decided that the level of deposit protection should be gradually but quickly increased in the EU.

A March 2009 directive required member states to increase coverage of their deposit guarantee schemes - first, to at least €50,000, and then, to a uniform level of €100,000 by the end of 2010.

The new directive confirmed that €100,000 is an appropriate level of protection and provides that the deposit guarantee schemes must be able to fund at least 0.8 per cent of covered deposits by 2024.

The scheme will be financed by a country's banks according to their size but there are also risk-based criteria. A new directive ensures that banks will have to pay in to the schemes on a regular basis, and not only after a bank failure.

Source: Cyprus Mail

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