Deposit Insurance is provided usually by a government agency to depositors against risk of arising from failure of a bank or other depository institution. In addition, deposit insurance is mandatory and it pays claims from a pool of funds to which every depository institution regularly contributes. However, it covers only a fixed maximum amount per account holder.
The main purpose of deposit insurance varies from one country to another but in most cases they are designed to protect less financially sophisticated depositors and to contribute to financial stability in an environment where banks are allowed to lend, or use otherwise, most of the money that they receive as deposits instead of safe-keeping the full amounts.
In fact there are countries with more than one deposit insurance system in operation and to mention Austria,Canada (Ontario & Quebec), Germany,Italy and the United States.
The main purpose of deposit insurance varies from one country to another but in most cases they are designed to protect less financially sophisticated depositors and to contribute to financial stability in an environment where banks are allowed to lend, or use otherwise, most of the money that they receive as deposits instead of safe-keeping the full amounts.
In fact there are countries with more than one deposit insurance system in operation and to mention Austria,Canada (Ontario & Quebec), Germany,Italy and the United States.
2 comments:
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deposit insurance....???
Great article...
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Thanks,
Endonesia
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