Private Bank Deposits and Macro/Fiscal Risk in the Euro-Area

We examine the relationship between private bank deposits and macro/fiscal risk in euro area. test three hypotheses: First, relative to Germany are determined by factors. Second, this is time-varying. Third, time-variation driven level of risk. Our findings validate all tested hypotheses. They also reveal persistent fragmentation EMU core periphery banking systems caused a deficit trust systems, unmitigated introduction OMT European Banking Union. have implications for Deposits Insurance Scheme (EDIS), which they offer tentative support.