Norway Consider Veto EU’s Bank Deposit Guarantee Directive

The Norwegian government is considering to use its veto against a new EU directive, setting a limit to the European banks deposit insurance guarantee. The proposed limit is EUR 100.000. The Norwegians banks, however, guarantees for up to EUR 250.000 of private citizens bank deposits. Norwegian minister of finance, Sigbjørn Johnsen, refuse to accept the upcoming regulations from Brussels, and says that he is considering using Norway’s right to veto any new EU directives for a period of 12 months if an agreement is not possible. If that turns out to be the case, it will be the first time Norway use its veto rights in the EU parliament.

“Yes, the veto is even considered. But the main track is to get through with our views.”

Sigbjørn Johnsen

Norwegian minister of Finance, Sigbjørn Johnsen, met on Thursday afternoon with the German MEP, Peter Simon, who is preparing the new EU directive on bank insurance guarantees for the EU parliament. Mr. Johnsen also met with MEP Burkhard Balz. “They were both nice guys,” Johsens says. “They fully understand the arguments we have, but time will tell if we get through with our case.” the experienced minister adds.

Mr. Sigbjørn Johnsen was also minister of finance in the early 90’s, and was the one who had to deal with the Scandinavian bank crisis in Norway.

In an interview with the Norwegian newspaper “Nationen,” Friday, he says the Norwegian government will consider using its veto rights to block the upcoming new EU directive on European banks deposit insurance guarantee.

The new directive, which Norway is obligated to adapt according to The EEA Agreement of 1992, sets a limit to the banks deposit guarantee of 100.000 euro.

That’s about the above the average guarantee in most European Area countries, but Norway has the highest deposit guarantee of all, equal to about 250.000 euro.

The directive is being processed by the European Parliament at the moment, and EU’s Finance Committee is scheduled to submit its recommendations March 17.

According to Johnson that means that all political groups will conclude on the case by the end of February.

The newspaper Nationen also writes that Norway plans to contact several other groups, not just the Social Democrats and Christian Democrats – who are the two largest political parties in the EU parliament.

“What we’re doing now is using all the relations we have inside the EU system. When the EU finance commissioner, Michel Barnier, comes to visit Norway later on this winter, it will also be on the agenda. We have to see what the final result is. Then we’ll decide what to do – or not to do,” Johnsen says.

“Is it a veto relevant?”

“Yes, the veto is even considered. But our main track is to get through with our views.”

Fear of Flying Money

EU finance commissioner Michel Barnier has on several occasions said that he EU worries about the Norwegian deposit guarantee, that it will result in a flight of capital.

The possibility that such movements of small deposits, followed by large deposits, might lead to a domino effect of falling banks, according to the EU.

However, Mr. Johnsen argues that an investigation of capital movements between the Nordic countries show that the Norwegian insurance scheme, (which is substantially better than in the other Nordic countries), do not have anti-competitive effects.

A Bank Champions League

The Spanish professor of economics, Rosa Maria Lastra, who is an expert on international monetary law, points out three main reasons for the new directive: 

To will protect bank customers.

To prevent banking crises, and so-called “bank runs”, where a large number of customers pulling out money from a bank at risk simultaneously. 

To make it easier for the regulators to shut down a bank, who actually should have been closed, as customers know that their deposits are protected when the bank declare bankruptcy.

Lastra believes it is important to figure out how large national banks, with branches in several countries, both in and outside the EU,  should be handled.

She proposes a “Champions League” solution, in which large international banks have an EU deposit guarantee, while the national banks have a national deposit guarantee.

No Comments

No other members of the Norwegian government are willing to comment on the finance ministers statements.


Prime minister Jens Stoltenberg refuses to say whether it will be necessary to veto the EU proposal that will reduce the Norwegian guarantees on bank deposits by more than 50%.

“I will never answer that,” he says when asked about the possibility of a veto against the deposit insurance directive.
“We are in close dialogue with the EU on this matter. It is not right to speculate on whether we want to use the reservation clause or not. We have succeeded before in getting through our opinions through,” Mr. Stoltenberg says.
And it’s not the first time the Norwegian government consider veto new EU regulations. But somehow amazingly a solution has always been found in the last minutes.
In any way – it  will probably not matter much if the Norwegians refuse the directive or not.
The nation is not a full member of the European Union, and the right to veto a directive from Brussels is limited to 12 months.
And it is also an open question if the EU even will accept a Norwegian veto in this case.

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Filed under International Econnomic Politics, Laws and Regulations, National Economic Politics

7 responses to “Norway Consider Veto EU’s Bank Deposit Guarantee Directive

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