It is necessary to enhance depositor protection, while avoiding the need for a fire sale of the assets of a DGS and limiting possible negative pro-cyclical effects across the banking sector being caused by the collection of extraordinary contributions. Member States should therefore have the option to allow their DGSs to use alternative funding arrangements from private sources that enable them to obtain at any time short-term funding from sources other than contributions, including before using their available financial means and funds collected through extraordinary contributions. Because credit institutions should primarily bear the cost and responsibility for financing DGSs, alternative funding arrangements from public funds should be allowed only in the form of guarantees or loans to a DGS with maturities not exceeding six years, used as a last resort and only in the event of payout or DGS contribution to resolution. This should not prevent the use of short-term loans from public sources before other alternative funding arrangements in exceptional circumstances to ensure timely repayment to depositors or contribution to resolution.
Text as published in the Official Journal, reproduced verbatim (including any typographical quirks of the source). For the authentic version, see EUR-Lex.
