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However, I understand that only 20k euro is covered by the German equivalent of the FDIC,

That didn't sound right, so I checked Wikipedia which says


EUR 50,000 (*)   

(coverage) 90%

(Valid since) July 2009   

Additional voluntary guarantee schemes run by different banking associations (private banks, cooperative banks, savings banks). An unlimited state guarantee was announced in October 2008 (and extended in July 2009), if one of those schemes failed. The legal details are nevertheless unclear.

So maybe 20.000 is covered 100% and anything above that only 90%?
by gk (gk (gk quattro due due sette @gmail.com)) on Wed Mar 24th, 2010 at 07:12:03 AM EST
After the 2008 failure of Lehman Brothers, the EU increased deposit insurance from €20k to €50k with member states having the option to increase their own insurance to €100k.

Northern Rock suffered a run in 2007 because the UK had an inadequate deposit insurance scheme which only covered 100% of the first £2k GBP, and 90% of the rest up to a total of £35k insured. People were, unsurprisingly, not reassured by the 90% recovery rate. See this WSJ blog post.

The brainless should not be in banking -- Willem Buiter

by Carrie (migeru at eurotrib dot com) on Wed Mar 24th, 2010 at 07:22:28 AM EST
[ Parent ]
That's only what I've heard through hearsay, I am not yet sure if that is the case.  But 50k still leaves me with more to protect, at the very least 20k euro.  I am not sure where to park that.

"Schiller sprach zu Goethe, Steck in dem Arsch die Flöte! Goethe sagte zu Schiller, Mein Arsch ist kein Triller!"
by Jeffersonian Democrat (rzg6f@virginia.edu) on Wed Mar 24th, 2010 at 07:26:41 AM EST
[ Parent ]
Well, the first option, as I understand it is that you can split your money between accounts at two different banks. Just make sure that the two brands are not difference faces of the same bank.
by Metatone (metatone [a|t] gmail (dot) com) on Wed Mar 24th, 2010 at 07:30:36 AM EST
[ Parent ]
A friend of mine who has a property in France and a reasonable € deposit account in France moved most of his € balance to Norwegian Krone last year (at my suggestion),and got a better rate, plus a 10% currency gain so far.

Of course, NOK/€ could equally go the other way, but I see NOK as oe of the soundesr currencies there is for the next 10 to 20 years at least, being energy backed, and a reasonably competently managed economy.

Or alternatively there's Norway's Statoil, which pays a decent dividend on its shares, actually takes a long term view to investment, and IMHO has a floor on the share price, because the government tends to buy the shares (they are majority owners) if the price drops.

Worth  thinking about if you wish to diversify your € risk. In my view the € is not sustainable as a currency in the long term without a fiscal integration which was always going to be difficult, and which I cannot now see happening.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Wed Mar 24th, 2010 at 10:09:18 AM EST
[ Parent ]
See also: Bank deposit insurance in Germany (econoblog101, September 2008)
The Einlagensicherungsfonds is the German bank deposit insurance scheme maintained by the Bankenverband. The statutes are quite interesting. §6 (10) on p.12 concerns ordinary clients of failed banks in Germany, like those of Lehman Brothers in Germany:
10. Ein Rechtsanspruch auf ein Eingreifen oder auf Leistungen des Einlagensicherungsfonds besteht nicht.
This says there is no legal title on the bank deposit insurance. This has always seemed to be a minor point, since German banks have been safe and secure places in the last 50 years. But, with the US banking system failing, should we reevaluate this minor point?

The brainless should not be in banking -- Willem Buiter
by Carrie (migeru at eurotrib dot com) on Wed Mar 24th, 2010 at 07:50:06 AM EST
[ Parent ]


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