Cost of non-Europe – Common deposit guarantee scheme

New research commissioned by the European Added Value Unit estimates the potential one-off cost of not having established a common deposit guarantee scheme (DGS) at 64 billion euro (0.49 per cent of GDP), in the case of a new financial crisis or, in case of a sovereign debt crisis, a potential cost of 32 billion euro (0.25 per cent of GDP). 62 Although both scenarios are non-continuous by nature, a mid-range value of 48 billion euro has been retained for this report. As in the case of the Banking Union, and following the recent historical trend of financial or banking crises which affect the European economy occurring at roughly decade-long intervals, we have calculated that the annual cost of not having a common deposit guarantee system would be broadly equivalent to dividing the anticipated one-off loss by ten, so representing a cost of some 5 billion on an annualised basis.