What is the deposit guarantee fund?

Unfortunately, the deposit guarantee fund is a term that has become familiar in recent times. And we say “unfortunately” because its popularity has been associated with the recent economic crisis and the fear, in many cases unfounded, that some savers have experienced to lose their bank funds, which in turn could have as a consequence a ‘corralito’ (the massive withdrawal of cash from banking entities). In this article we tell you exactly what is the deposit guarantee fund, what is its origin and function as well as the importance of a key economic concept: solvency.

Deposit guarantee fund

Deposit guarantee fund

The deposit guarantee fund is an account created at the Bank of Spain by banks, savings banks and credit cooperatives whose objective is to ensure that customers of a bankrupt bank can dispose of their money up to a certain limit. . This balance limit, as in most European countries, is 100,000 euros. Which means, in other words, that if a bank goes bankrupt, its customers are guaranteed deposits up to 100,000 euros. If the client had a bank balance higher than those 100,000 euros, he could not recover the difference.

However, it is a security mechanism that has been endowed by banks and the Spanish State itself, and in recent history has not needed to ‘dip into’ it. Therefore, there is still no experience on how this deposit guarantee fund, which was born in 1977 and which has been strengthened economically and administratively in 2008 and 2010, would work and respond, when the limit of the guaranteed amount was extended and when it was extended. reinforced its role within the framework of the Fund for Orderly Bank Restructuring, known as FROB.

Deposit and solvency guarantee fund

Deposit and solvency guarantee fund

A concept that is closely related to the deposit guarantee fund is that of solvency, which is the ability of a bank to meet all its obligations in the medium and long term and to assume the risks derived from its own activity. It is something very measured and monitored by European economic institutions, which calculate a capital ratio. At the Spanish level, the Bank of Spain supervises the behavior of the country’s entities, although the highest authority in this regard is the European Banking Authority (EBA), which sets the guidelines and conditions to be followed by the Bank entities.

With regard to microcredit companies, the law does not include these in the list of entities that must undergo solvency and stress tests. However, the economic capacity of a company is essential for its own credibility and to offer confidence to its customers. In the case of Best Credit, the best presentation letter is his own statistical data: more than 331 million euros loaned up to this moment in more than 610,000 credit operations transacted. In addition, it has a recognized experience in European countries such as the Czech Republic, Slovakia or Poland, and has already extended its services to others such as Mexico or Argentina.

In addition, the reliability of Best Credit is given by the selection of his collaborators: through our website you can get in touch with prestigious and solvent lenders, who count in turn with enough financial support to develop the work of granting mini-loans online These fast lenders, in addition to being solvent, have this way of liquidity (ability to cope with short-term obligations) necessary to operate in this sector.

Risk management in Best Credit

Risk management in Best Credit

Another important concept that is related to solvency and liquidity is risk. One might think that the economic operations that are transacted through Best Credit involve greater risk for the lenders, since in many cases credits are granted to people registered in lists of defaulters as ASNEF or who do not have a fixed payroll at that time . However, this risk is always under control, especially due to the fact that they are low-value loans, little compromising for the lenders.

In Best Credit, you can request and process online loans that do not exceed € 750 , which is a sufficient amount to meet many daily and professional expenses but can not be considered a major operation. On the other hand, an important factor is the return period, very short: between 1 and 30 days . This is in favor of the liquidity of the lenders, who see how the amount of their credits and therefore of their economic funds are always restored in a short period of time.

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