The Ultimate Banking Glossary Europe: Key Terms & Definitions
Ever felt overwhelmed by the complex jargon in the European banking world? You’re not alone. But by the end of this read, you’ll have a clearer understanding. Dive into this concise Banking Glossary Europe to navigate with ease.
Resolution and Recovery
Banking Resolution: A set of actions taken by authorities to handle a bank or financial institution facing significant financial difficulties. This ensures that the essential functions of the bank continue, thereby minimizing the potential adverse impact on financial stability. For details, see Directive 2014/59/EU.
Recovery Plan: A strategy that institutions prepare, outlining the measures they would take to restore their financial position following a significant deterioration. Check Directive 2014/59/EU for specifics.
Deposit Guarantee Scheme (DGS)
DGS: An arrangement that compensates depositors if a bank fails. It ensures that depositors receive their funds up to a set limit. More on this can be found in Directive 2014/49/EU.
Capital Requirements
Capital Buffer: Extra capital banks are required to hold, atop the minimum regulatory requirements. This provides an additional layer of protection against losses. Refer to Regulation (EU) No 575/2013.
Frequently Asked Questions
What’s the difference between Banking Resolution and Recovery?
Banking Resolution refers to the actions taken by authorities when a bank is in distress, ensuring stability. On the other hand, the Recovery Plan is the bank’s strategy to restore its financial health.
How are depositors protected in Europe?
Depositors are protected by the Deposit Guarantee Scheme (DGS) which ensures they get their funds up to a certain limit if a bank fails.
Grasping these terms is the first step to understanding European banking better. Stay tuned for more insightful pieces, as this Banking Glossary Europe is ever-expanding.
