Garantiifondide

Garantiifondid, often translated as guarantee funds or deposit insurance schemes, are mechanisms established by governments or financial regulatory bodies to protect depositors' money in case of a bank failure. Their primary purpose is to maintain public confidence in the banking system and prevent bank runs by assuring individuals and businesses that their deposited funds are safe up to a certain limit.

These funds are typically financed through contributions from the financial institutions themselves, often calculated as a percentage of their insured deposits. This creates a self-sustaining system where the banking industry collectively insures its depositors. When a bank becomes insolvent, the garantiifond steps in to reimburse depositors for their covered balances.

The coverage limit, which specifies the maximum amount an individual can recover per bank, varies significantly between countries. For example, in the European Union, the minimum harmonized deposit insurance coverage is €100,000 per depositor per bank. However, many member states have opted for higher coverage levels.

Garantiifondide play a crucial role in financial stability. By mitigating the risk of depositors losing their savings, they reduce the likelihood of systemic crises that could arise from widespread panic and withdrawals. This, in turn, helps to ensure the smooth functioning of the economy. They are a fundamental component of modern financial regulation.