Germany gets new deposit insurance law

Germany has introduced a new law to strengthen its bank deposit insurance system, following a directive by the European Union that requires each member nation to meet improved deposit insurance standards.

The German government adopted a package of measures recently at a cabinet meeting in Berlin aimed at ensuring depositors' savings are better protected if a German bank fails.

The measures responded to a European Union directive passed in June, requiring each EU member country to create a deposit insurance fund for the nation's banking sector. The directive specifies that each nation's fund must set aside an amount corresponding to at least 0.8 percent of total bank deposits covered by deposit guarantees.

The deposit insurance fund is to be brought up to the required level over the coming ten years, i.e. by 2024. It's part of a wider effort to renovate the European banking system to achieve greater safety and stability in the wake of the problems since the 2008 financial crisis, which was generated by irresponsible banking practices.