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Deposit insurance
Explicit deposit insurance
is a measure implemented in many countries to protect bank depositors,
in full or in part, from losses caused by a bank's inability to pay its
debts when due. Deposit insurance systems are one component of a
financial system safety net that promotes financial stability.
Experiences from bank runs during the Great Depression led to the
introduction of deposit insurance in the US.
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Why it exists
Banks are allowed (and usually encouraged) to lend or invest
most of the money deposited with them instead of safe-keeping
the full amounts (see fractional-reserve banking). If many
of a bank's borrowers fail to repay their loans when due,
the bank's creditors, including its depositors, risk loss.
Because banks rely on customer deposits that can be
withdrawn on little or no notice, banks are prone to a Bank
run, where depositors seek to withdraw funds quickly ahead
of a possible bank insolvency. Because banking institution
failures have the potential to trigger a broad spectrum of
harmful events, including economic recessions, policy makers
maintain deposit insurance schemes to protect depositors and
to give them comfort that their funds are not at risk.
Deposit insurance was formed to protect small unit banks in
the United States when branching regulations existed. Banks
were restricted by location thus did not reap the benefits
coming from economies of scale, namely pooling and netting.
To protect local banks in poorer states, the Federal
government created deposit insurance.[1][2]
Many national deposit insurers are members of the
International Association of Deposit Insurers (IADI), an
international organization established to contribute to the
stability of financial systems by promoting international
cooperation and to encourage wide international contact
among deposit insurers and other interested parties, in
particular, IADI.
Detractors of deposit insurance claim the schemes introduce
a moral hazard issue, encouraging both depositors and banks
to take on excessive risks.[3] Without deposit insurance,
banks would compete for deposits because depositors would
prefer safe banks over risky banks to guard their money.
With deposit insurance, banks can take excessive risks
because depositors do not fear for their deposits safety and
thus do not move their money to safer banks. The risks are shared by all banks, be they safe or risky. |
How it works
Deposit insurance institutions are for the most part government run or
established, and may or may not be a part of a country’s central bank,
while some are private entities with government backing or completely
private entities.
There are a number of countries with more than one deposit insurance
system in operation including Austria, Canada (Ontario & Quebec),
Germany, Italy, and the United States.
On the other hand, one deposit insurance system can cover more than one
country: the Marshall Islands, the Federated States of Micronesia, and
Puerto Rico are insured by the US Federal Deposit Insurance Corporation.
Cameroon, the Central African Republic, Chad, Congo, Equatorial Guinea,
and Gabon will also be covered by a single system.
Overview by country
According to IADI, as of June 2008, there are currently 119 countries
with a deposit insurance system in operation, pending, planned or under
serious study (i.e. 99 in operation, 8 pending, 12 planned or under
serious study).
Deposit insurance
Overview by country
United States
Canada
Mexico
Caribbean and South America
Saint Vincent
Caiman Islands
Argentina
Chile
Brazil
Uruguay
European Union: European Union
Austria
Belgium
Bulgaria
Czech Republic
Denmark
Finland
France
Germany
Greece
Hungary
Ireland
Italy
Luxembourg
Netherlands
Poland
Portugal
Slovakia
Slovenia
Spain
Sweden
United Kingdom
Rest of Europe
Belarus
Iceland
Latvia
Norway
Russia
Switzerland
Turkey
British Isles
Offshore
Asia
India
Hong Kong
Malaysia
Thailand
Economic impact
When a nation state has a deposit insurance scheme, foreign investors (aka
non-resident bank depositors) are more likely to passively deposit
larger amounts of money in the banks of said nation state (that has a
bank deposit insurance scheme).
Having a bank deposit insurance scheme (for all practical purposes)
guarantees that a nation state will more likely have a higher rate of
passive foreign investment (within the margin of insurable amount).
Passive foreign investment in a nation state’s finance system allows for
more lending to be made when global finance system conditions constrict
the amount of lendable money. There has been substantial research done
over the years on the impact on foreign investment of bank deposit
insurance schemes.
Deposit insurance enables banks to increase the money supply, without it
underfunded banks might suffer a bank run which is prevented by the
insurance. This encourages inflation.
Website List of Deposit
Insurance worldwide organizations
Deposit Insurance
worldwide Banks
List of SWIFT Codes
Worldwide
List of
correspondent Banks networks worldwide with SWIFT CODE
List of Correspondent Banks in Europe
Website List of Deposit
Insurance worldwide organizations
Deposit insurance
Overview by country
United States
Canada
Mexico
Caribbean and South America
Saint Vincent
Caiman Islands
Argentina
Chile
Brazil
Uruguay
European Union: European Union
Austria
Belgium
Bulgaria
Czech Republic
Denmark
Finland
France
Germany
Greece
Hungary
Ireland
Italy
Luxembourg
Netherlands
Poland
Portugal
Slovakia
Slovenia
Spain
Sweden
United Kingdom
Rest of Europe
Belarus
Iceland
Latvia
Norway
Russia
Switzerland
Turkey
British Isles
Offshore
Asia
India
Hong Kong
Malaysia
Thailand
A
Albania
Albanian Deposit Insurance Agency
www.dia.org.al
Argentina
Seguros de Dep?sito Sociedad An?nima
www.sedesa.com.ar
Armenia
Armenian Deposit Guarantee Fund
www.adgf.am
Austria
Austrian Bankers' Association
www.voebb.at
B
Bahrain
Deposit Protection Scheme Board, Bahrain Monetary Agency
www.cbb.gov.bh
Bahamas
Deposit Insurance Corporation
www.centralbankbahamas.com
Bangladesh
Central Bank of Bangladesh
www.bangladesh-bank.org
Belgium
Protection Fund for Deposits and Financial Instruments
www.protectionfund.be
Bosnia and Herzegovina
Deposit Insurance Agency of Bosnia and Herzegovina
www.aod.ba
Brazil
Fundo Garantidor de Cr?ditos
www.fgc.org.br
Bulgaria
Deposit Insurance Fund
www.dif.bg
C
Chile
Central Bank of Chile
www.bcentral.cl
Colombia
Fondo de Garant?as de Instituciones Financieras
www.fogafin.gov.co
Croatia
State Agency for Deposit Insurance and Bank Rehabilitation
www.dab.hr
Cyprus
Central Bank of Cyprus
www.centralbank.gov.cy
Czech Republic
Deposit Insurance Fund
www.fpv.cz
D
Denmark
The Guarantee Fund for Depositors and investors
www.gii.dk
E
Ecuador
Agenc?a de Garant?a de Dep?sitos
www.agd.gov.ec
El Salvador
Instituto de Garant?a de Dep?sitos
www.igd.gob.sv
Estonia
Guarantee Fund
www.tf.ee
F
Finland
Deposit Guarantee Fund
www.talletussuojarahasto.fi
France
Association fran?aise des Banques
www.afb.fr
G
Germany
Federation of German Banks
www.german-banks.com
Gibraltar
Gibraltar Deposit Guarantee Board
www.gdgb.gi
Greece
Hellenic Deposit Guarantee Fund
www.hdgf.gr
H
Hong Kong
Hong Kong Deposit Protection Board
www.dps.org.hk
Hungary
National Deposit Insurance Fund
www.oba.hu
I
Iceland
Central Bank of Iceland
www.sedlabanki.is
India
Deposit Insurance and Credit Guarantee Corporation
www.dicgc.org.in
Indonesia
Indonesia Deposit Insurance Fund
www.lps.go.id
Ireland
Central Bank of Ireland
www.centralbank.ie
Isle of Man
Bank Deposit Compensation Scheme, Isle of Man Financial
Supervision
www.gov.im
Italy
Interbank Deposit Protection Fund
www.fitd.it
J
Jamaica
Jamaica Deposit Insurance Corporation
www.jdic.org
Japan
Deposit Insurance Corporation of Japan
www.dic.go.jp
Jordan
Deposit Insurance Corporation
www.dic.gov.jo
K
Kazakhstan
Kazakhstan Deposit Insurance Fund
www.kdif.kz
Kenya
Deposit Protection Fund Board of Kenya
www.centralbank.go.ke
Korea
Korea Deposit Insurance Corporation
www.kdic.or.kr
Kuwait
Central Bank of Kuwait
www.cbk.gov.kw
L
Latvia
Financial and Capital Market Commission
www.fktk.lv
Lebanon
National Deposits Guarantee Institution,Banque du Liban
www.bdl.gov.lb
Liechtenstein
Financial Services Authority
www.firstlink.li
Lithuania
Deposit Insurance Fund of Lithuania
www.idf.lt
Luxembourg
Banque Centrale du Luxembourg
www.bcl.lu
M
Macedonia
National Bank of the Republic of Macedonia
www.nbrm.gov.mk
Malaysia
Malaysia Deposit Insurance Corporation
www.pidm.gov.my
Malta
Malta Financial Services Centre
Mexico
Instituto para la Protecci?n al Ahorro Bancario
www.ipab.org.mx
Moldova
Deposit Guarantee Fund in Banking System
www.fgdsb.md
Montenegro
Deposit Protection Fund
www.fzdcg.org
Morocco
Bank Al-Maghrib, Fonds Collectif de Garantie des D?p?ts
www.bkam.gov.ma
N
Netherlands
De Netherlandsche Bank
www.dnb.nl
Nicaragua
Fondo de Garant?as de Dep?sitos de las Instituciones
Financieras
www.fogade.gob.ni
Nigeria
Nigeria Deposit Insurance Corporation
www.ndic-ng.com
Norway
Norwegian Banks’ Guarantee Fund
www.fnh.no
P
Peru
Fondo de Seguros de Dep?sitos
www.sbs.gob.pe
Philippines
Philippine Deposit Insurance Corporation
www.pdic.gov.ph
Poland
Bank Guarantee Fund
www.bfg.pl
Portugal
Fundo de Garant?a de Dep?sitos
www.bportugal.pt
R
Romania
Deposit Guarantee Fund
www.bnro.ro
Russian Federation
Deposit Insurance Agency
www.asv.org.ru
S
Singapore
Singapore Deposit Insurance Corporation
www.sdic.org.sg
Slovakia
Deposit Insurance Fund
www.fovsr.sk
Slovenia
Bank of Slovenia
www.bsi.si
South Korea
Korea Deposit Insurance Corporation
www.kdic.or.kr
Spain
Guarantee Funds for Deposit Held by Credit Institution
www.fgd.es
Sri Lanka
Central Bank of Sri Lanka, Bank Supervision Department
www.cbsl.lk
Sudan
Bank Deposit Security Fund of Sudan
Sweden
Swedish Deposit Guarantee Board
www.ign.se
Switzerland
Swiss Bankers' Association
www.swissbanking.org
T
Taiwan
Central Deposit Insurance Corporation
www.cdic.gov.tw
Tanzania
Deposit Insurance Board, Bank of Tanzania
www.bot-tz.org
Trinidad and Tobago
Deposit Insurance Corporation
www.dictt.org
Turkey
Savings Deposit Insurance Fund
www.tcmb.gov.tr
U
Ukraine
Deposit Guarantee Fund
www.fg.org.ua
United Kingdom
The Financial Services Compensation Scheme
www.fscs.org.uk
United States
Federal Deposit Insurance Corporation
www.fdic.gov
Uruguay
Bank Saving Protection Superintendency
www.bcu.gub.uy
Uzbekistan
Citizens' Bank Deposit Guarantee Fund
V
Venezuela
Guaranty of Deposits and Banking Protection Fund
www.fogade.gov.ve
Vietnam
Deposit Insurance of Vietnam
www.div.gov.vn
Z
Zimbabwe
Deposit Protection Board
www.dpb.co.zw
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