On 10 May 2026 a legislative package entered into force in the EU that governs what happens to your money if your bank fails. Three legal acts, published in the Official Journal of 20 April, in force on the twentieth day after.
The headline you would expect is missing. The limit of €100,000 per bank and per customer stays exactly as it is. What changes is the mechanism behind it: which banks are resolved, who bears losses in which order, and what the deposit guarantee scheme may spend its money on.
Anyone holding more than €100,000 with one bank should know this mechanism. It decides whether your balance is money or a claim. The wider context, the moment at which money is still there but may no longer be moved, is set out under capital controls.
What exactly has entered into force
The package consists of three legal acts, all dated 30 March 2026:
- Directive (EU) 2026/806, which amends the rules on the recovery and resolution of banks,
- Directive (EU) 2026/804, which amends deposit guarantee schemes,
- Regulation (EU) 2026/808, which adapts the Single Resolution Mechanism in the euro area.
In force does not mean that everything is different tomorrow. Member states must transpose the two directives into national law by 11 May 2028. The regulation applies essentially from the same date, with individual provisions applying from 11 June 2026.
The law is thus settled. The rules under which your bank will be resolved from 2028 have been adopted Union law since 10 May. Ireland, the Netherlands, Belgium, Luxembourg, Denmark, Sweden and Finland must take them over like every other member state. National parliaments' room for manoeuvre is limited to transposition.
The package does not apply to accounts in Switzerland or in the United Kingdom. There, Swiss and British banking law govern what happens in an emergency.
The €100,000 stays, protection for home sales is harmonised
The coverage level of the deposit guarantee stays at €100,000. That applies per customer and per bank, as before.
What is new is a uniform rule for temporarily high balances. Anyone who sells the home they live in suddenly has a large sum in their account for a few weeks or months. Until now, member states could set this protection at between three and twelve months, as the recitals of the new deposit guarantee directive state.
From now on the rule across the EU is: such deposits are protected for six months up to an amount of no less than €500,000. For property transactions by natural persons the directive also names a maximum of €2.5 million. Covered are not only sale proceeds but also funds held briefly for the purchase of a home you will live in. The condition is that you can document the transaction.
In the United Kingdom a protection of this kind exists under its own rules. Since 1 December 2025 the Financial Services Compensation Scheme has protected £120,000 per person and per authorised bank, and temporary high balances up to £1.4 million, according to the Prudential Regulation Authority. Under the PRA's depositor protection rules, the qualifying events include the sale of a private residential property and money deposited in preparation for buying one, and the protection runs for six months.
For owners in the EU, the novelty is above all a floor: €500,000 becomes the minimum for the whole Union. The practical consequence stays the same on both sides of the Channel. The higher protection is temporary, tied to evidence and applies only to certain events. The money of a business owner that sits permanently above the limit does not fall under it.
The new ranking: who gets paid first in insolvency
The most important part of the package concerns the ranking. When a bank ends up in ordinary insolvency proceedings, its creditors are paid in a fixed order. Whoever stands higher gets paid first.
The amended resolution directive sets three tiers for deposits:
- At the top are covered deposits, that is the first €100,000, and the claims of the deposit guarantee scheme.
- Below them is the part of deposits of individuals, small and medium-sized enterprises and certain public bodies that exceeds the coverage level.
- Below that are all other deposits, for example those of large companies.
The third tier is new. Until now the EU had not regulated the rank of these other deposits uniformly. Now all deposits rank ahead of ordinary unsecured creditors. The recitals of the directive call this a general depositor preference and say openly what it is for: to further contain the risk of a run on the banks.
For your balance over €100,000 with one bank this means: it stands in the second tier. Ahead of you are only the covered deposits and the deposit guarantee scheme. Behind you are bondholders and other unsecured creditors.
That is a better position than at the very back. It is no guarantee. A rank governs the order of distribution, not the size of what there is to distribute.
How a bail-in reaches balances
The ranking does not only apply in insolvency. It also determines how the resolution authority proceeds when it rescues a bank instead of liquidating it. The tool for this is called bail-in: the bank's liabilities are written down or converted into shares.
The order has been set out since 2014 in the resolution directive. First come common equity, that is the owners. Then the further capital instruments, then subordinated liabilities. Only after that do the remaining liabilities follow, in the ranking of ordinary insolvency proceedings.
Under the same directive, covered deposits are excluded. Your first €100,000 are therefore not written down. For the part above, there is no such exemption. It ranks high, but it is in the ranking.
The new package builds an additional step in at this point. Before the authority may draw on financing sources beyond the resolution fund, the amended directive requires that all bail-in-able liabilities be written down or converted that are not eligible deposits and that rank below the deposits of individuals and small businesses.
The wording shows the order. Eligible deposits above the coverage level are bail-in-able liabilities. They are spared as long as others are available. Being spared is a question of sequence, not of principle.
More banks are to go into resolution instead of insolvency
The recitals of the directive describe the finding the package responds to. The 2014 resolution framework, they say, is rarely used. When smaller and medium-sized institutions fail, national measures are used instead, and taxpayers' money is still deployed rather than the funds financed by the banks.
As one reason, the directive expressly names the risk that depositors of deposit-funded institutions have to bear losses so that these institutions can obtain external funds in resolution.
The package's answer: the authorities are to weigh differently whether a resolution is in the public interest. A resolution is only to be dispensed with if an ordinary liquidation would achieve the objectives not merely equally well but more effectively. And the deposit guarantee scheme may in future use its money to support the sale of a bank to an acquirer, including deposits above the coverage level.
There are limits. In a resolution case, the contribution of the deposit guarantee scheme is not to exceed the bank's covered deposits. For transfers to a buyer it is not to exceed 62.5 per cent of the scheme's target level, unless the competent authority decides otherwise, for example to preserve financial stability.
What this means for your balance over €100,000
Put the parts together and a clear picture of the powers emerges.
When a bank fails, the resolution authority can write down liabilities or convert them into shares. The ranking decides who is hit first. Your covered €100,000 are excluded. The part above belongs to the loss-absorbing pool, even if it now stands higher in the queue than before.
The package increases the number of cases in which this mechanism is applied at all. More banks, smaller ones included, are to go into resolution. The deposit guarantee scheme is to help transfer deposits to a sound bank. In the best case you notice nothing, because overnight your account sits with another institution.
In the less good case your balance depends on proceedings whose length and outcome you do not influence. A dividend paid on a claim in insolvency is something other than money in an account.
The precedent lies in the euro area
The euro area has already seen that deposits do not simply remain available in a banking crisis. In 2013 Cyprus received a support programme from the euro rescue fund. The European Stability Mechanism writes in its own account that capital controls and the adjustment programme helped to stabilise deposits and the liquidity of the banking system.
Capital controls, in the middle of the eurozone, as a tool to stabilise deposits. That is the language of the responsible institution itself.
The new package is the lesson drawn from such cases. It makes resolution more predictable and the ranking clearer. It changes nothing about the principle that a deposit above the coverage level is a claim against a company whose fate in a crisis is decided by authorities.
The UK, Ireland, the Nordics, Benelux and Switzerland
In Ireland, the Netherlands, Belgium, Luxembourg and Finland the package applies in full. They must transpose the directives by May 2028, and as members of the euro area they are part of the Single Resolution Mechanism. Denmark and Sweden are bound by the two directives as EU member states.
The United Kingdom has its own regime. Under the Banking Act 2009, the Bank of England can bail in a failing bank's liabilities. Liabilities representing protected deposits are excluded, and in deciding on further exclusions the Bank must give due consideration to the principle that liabilities are treated according to the priority they would enjoy in a liquidation. In a UK bank insolvency, eligible deposits up to the compensation limit are preferential debts, and so is the part above the limit held by individuals and small and medium-sized businesses, under Schedule 6 to the Insolvency Act 1986. The logic is the same as in the EU: the covered amount is protected, the rest is a claim with a good rank.
The package does not apply in Switzerland. An account there stands under a different legal order, with its own deposit protection and its own resolution rules. Its risk therefore does not hang on the same decisions as your account in the EU or in the UK.
What you can take from this
Three sober steps follow from the legal position.
First: spread balances over the limit across several banks. The coverage level applies per bank. Anyone holding €400,000 with one institution has €300,000 in the loss-absorbing pool. Anyone spreading it across four institutions has, in principle, everything below the limit. Make sure that different brands do not belong to the same bank.
Second: think not only in banks but in legal orders. Four accounts with four banks in the same country protect you from one bank failing. They do not protect you from a decision that hits all banks of the same jurisdiction at once, whether a wave of resolutions or a restriction on capital movements. That is why accounts outside the EU belong in every serious asset protection strategy. They protect because they stand under a different legal order, not because they would be hidden. Why the view has to reach beyond the EU is summarised under why outside the EU.
For business owners a separate calculation applies. The business account of your limited company is a deposit of the company, not yours. Small and medium-sized enterprises stand in the second tier with the part above the coverage level, large companies in the third. Anyone who keeps the company's liquidity and their private wealth at the same bank has two balances in the same risk. The separation by institutions and legal orders applies to both.
Third: plan large incoming payments. When you sell a property, the proceeds sit high in an account for a while. The higher protection applies only with evidence and only for six months. Anyone who does not split the proceeds afterwards is back above the limit with the full amount.
The CMDI package is a piece of regulatory policy. It allocates risks more clearly. It does not remove them. The limit above which your money becomes part of the loss-absorbing pool remains €100,000 per bank.