European Deposit Insurance: Back to square one The Germans have won: European Deposit Insurance will not be implemented. This is the way to say goodbye to the completion of the banking union. New examinations for banks and perhaps the bail-in for government bonds are coming. For Italy, hard times on the horizon? Change of course…
What are deposit guarantee schemes? A deposit is a sum of money that a customer holds at a bank, such as in a savings account. The business model of most credit institutions is that this money is largely lent out to other customers, preserving the rest for depositor withdrawals. To shelter a large portion of…
What is a deposit guarantee scheme? Money deposited in a bank savings account, for example, is called a deposit. In line with their business model, most banks lend the deposited money to other customers, keeping a part of the amount in case someone wants to withdraw the money. Banks ensure that a large part of…
How is the EU deposit guarantee scheme organized? In principle, if a bank in the European Union (EU) goes bankrupt, deposits such as current account balances, demand deposits and term deposits are legally protected up to €100,000 per customer and bank. In the case of joint accounts, such as those of married couples, the protection…
Deposit protection: Protecting your savings Consumers often prefer a particularly safe form of investment. This is one of the reasons why classic bank deposits, such as current accounts, demand deposit accounts, savings books or term deposit accounts, are so popular. What all of these forms of investment have in common is that the funds invested…
The need for deposit insurance is due to the frequent bankruptcies of banking institutions. The system is aimed at compensating for lost savings of depositors, as well as for losses of the banks themselves. Despite the fact that the need for such a system is obvious, it operates only in 70 countries of the world,…
Insurance requirements To gain this advantage, member banks must comply with certain liquidity and reserve requirements. Banks are classified into five groups according to their risk-based capital ratio : Well capitalized: 10% or higher Sufficiently capitalized: 8% or higher Undercapitalized: less than 8% Significantly undercapitalized: less than 6% Critically undercapitalized: less than 2% When…