EN 
 
 
  OPINION OF THE EUROPEAN CENTRAL BANK 
of 10 March 2009 
at the request of  the Central Bank of Cyprus and of the Cypriot Authority for the 
Supervision and Development of Cooperative Societies on certain draft regulations 
related to the Deposit Protection Scheme  
(CON/2009/20) 
 
Introduction and legal basis  
On 13 February 2009 the European Central Bank (ECB)  received a request from the Central Bank of 
Cyprus for an opinion on draft regulations ame nding the Establishment and Operation of a Deposit 
Protection Scheme Regulations of 2000 to 2006 and on 23 February 2009 the ECB received a request 
from the Cypriot Authority for the Supervision and Development of Cooperative Societies for an opinion 
on draft regulations amending the  Establishment and Operation of  the Deposit Protection Scheme 
Regulations of 2000 to 2004 (herei nafter the ‘draft regulations’). 
The ECB’s competence to deliver an  opinion is based on Article 105(4) of the Treaty establishing the 
European Community and the third and sixth indents of Article 2(1) of Council Decision 98/415/EC of 
29 June 1998 on the consultation of the European Ce ntral Bank by national authorities regarding draft 
legislative provisions1, as the draft law relates to the Central Bank  of Cyprus and to rules applicable to 
financial institutions insofar as they materially influe nce the stability of financial institutions and markets. 
In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central 
Bank, the Governing Council has adopted this opinion. 
 1.  Purpose of the draft regulations The draft regulations will amend the Establishm ent and Operation of a Deposit Protection Scheme 
Regulations of 2000 to 2006
2 and the Establishment and Operation of the Deposit Guarantee Scheme 
Regulations of 2000 to 20043, establishing two separate schemes for the benefit of the clients of Cypriot 
banks and cooperative credit institu tions (CCIs), respectively. As a result, in both cases, the deposit 
guarantee and deposit protection schemes will be ame nded so that: (i) statutory deposit protection 
coverage will be raised from EUR 20 000 to EUR 100 000; (ii) the payout delay will be reduced from 
                                                 
1   OJ L 189, 3.7.1998, p. 42. 
2  Reg. No 66/2000, Official Gazette of the Republic, 3.3.2000, Annex III (Part I), p. 241.  
3  Reg. No 40/2000, Official G overnment Gazette of the Republic, 25.2.2000, Annex III (Part I), p. 203. 
2 three months to 20 working days; (iii) the co-insur ance requirement resulting in depositors bearing 10 % 
of the loss up to the statutory deposit protection level will be eliminated; (iv) coverage will be expanded 
to include deposits denominated in all currencies;  and (v) the deposit guarantee and deposit protection 
schemes will be reinforced through a progressive increase in its basic capital. The latter may be achieved 
by increasing the initial contribution from the banks and CCIs, by raisi ng the maximum amount of required 
special and/or supplem entary contributions, and/or by abolishing  the maximum limit on the amount that the 
Management Committee may borrow. 
 2.  ECB observations 2.1  In line with its previous opinions
4, the ECB welcomes the proposed increase in the total amount of 
protected deposits in accordance with the conclu sions of the Ecofin Council of 7 October 20085 
and the Directive of the European Parliament and of the Council amending Directive 94/19/EC on 
Deposit Guarantee Schemes as regards the coverage  level and the payout delay (hereinafter the 
‘amending Directive’)6. The ECB also notes that the guaranteed amount under the two schemes is 
identical and that this will help to avoid distorti ons in the national financial system. The ECB takes 
this opportunity to reiterate that Member States, when implementing the above-mentioned 
amending Directive, should act in a coordinated ma nner to avoid significant differences in national 
implementation measures from having a counterproductiv e effect by creating distortions in global 
banking markets. 
2.2 Reducing delays in payouts of guaranteed de posits can strengthen depositor confidence, which 
plays a key role in the effectiveness of deposit protection schemes7. At the same time, it is essential 
that a pragmatic approach be taken to introducin g the necessary reduction in payout delays, thereby 
preserving credibility of th e deposit guarantee schemes8. Finally, attention should be drawn to the 
importance of establishing efficient operational processes for verifying claims and reimbursing 
depositors, as well as ensuring that sufficient sources of funding are available. 
 
                                                 
4  See, e.g., paragraph 2.2 of ECB Opin ion CON/2008/51 of 17 October 2008 at th e request of the Greek Ministry of 
Economy and Finance on a draft law on, inter alia , the establishment of the ‘Depos itors and Investors of Credit 
Institutions Compensation Fund’; paragraph 2.1 of ECB Opin ion CON/2008/61 of 28 October 2008 at the request of the 
Belgian Minister for Finance on a draft royal decree implem enting the Law of 15 October 2008 on measures promoting 
financial stability (title shortened); and paragraph 2.1 of ECB Opin ion CON/2008/69 of 17 November 2008 at the request 
of the Irish Minister for Finance on a draft Financ ial Services (Deposit Guar antee Scheme) Bill 2008. 
5   The Ecofin Council agreed that ‘all Member States would,  for an initial period of at least one year, provide deposit-
guarantee protection for individuals for an amount of at  least EUR 50 000, acknowledging that many Member States 
determine to raise their minimum prot ected amount to EUR 100 000’. See the Press Release for this meeting (13784/08), 
available on the Council’s website at www.consilium.europa.eu.   
6  Not yet published in the Offi cial Journal. For a summary of the salient points of this Directive see ‘The Council 
strengthens depositor protection’, Pre ss Release, Brussels, 26 February 2009 No 6983/09, available on the Council’s 
website at www.consilium.europa.eu. 
7  See, e.g., paragraph 2.2 of ECB Opinion CON/2008/70 of 18 November 2008 at the request of the Council of the 
European Union on a proposal for a Directive of the Eur opean Parliament and of th e Council amending Directive 
94/19/EC on Deposit-Guarantee Sche mes as regards the coverage level and the payout delay. 
8  See Opinion CON/2008/70. 
3 This opinion will be published on the ECB’s website. 
  Done at Frankfurt am Main, 10 March 2009. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET