Depositor and Investor Protection in the EU and the Netherlands: A Brief History

This paper provides some history of deposit insurance and investor protection in the Netherlands against the background of the history of such protection in the European Union, EU-legislation and the recent changes in the design of financial supervision in the Netherlands. It discusses how countries have responded to the EU-directives and to the changes in the financial environment. The main findings of the paper are the following. The Netherlands was among the first European countries to introduce deposit insurance. Deposit insurance systems in the EU are frequently funded ex post and offer lower coverage than systems in most other regions of the world. The system in the Netherlands shares these characteristics. Over time, all countries have adapted their systems in the spirit of the EU-directives on the matter, although it seems that some countries still need to undertake changes to comply with specific articles. During the 1990s, some convergence towards best practices has taken place. EU-regulation has obliged member countries to make their systems mandatory and there is a tendency towards ex ante funding and risk-related premiums. The the issues to be addressed by the Netherlands are whether to combine deposit and investor protection schemes, shift to ex ante funding partially or entirely and impose risk-adjusted charges. A follow-up paper will examine these issues further.