{"id":32379,"date":"2022-08-20T21:00:00","date_gmt":"2022-08-20T19:00:00","guid":{"rendered":"https:\/\/www.11onze.cat\/?p=32379"},"modified":"2022-08-03T15:25:34","modified_gmt":"2022-08-03T13:25:34","slug":"eu-idea-plug-dgf-hole","status":"publish","type":"post","link":"https:\/\/www.11onze.cat\/en\/magazine\/eu-idea-plug-dgf-hole\/","title":{"rendered":"EU\u2019s idea to plug the DGF hole"},"content":{"rendered":"<div class=\"component text\">\n  <div class=\"container\">\n\n\n    <div class=\"row\">\n      <div class=\"col  col-lg-8  offset-lg-2\">\n        <h3><b>The European Union is finalising the details of legislation for a common deposit guarantee fund that would come into force in 2028. In the first phase, it would be limited to supporting national guarantee funds, but would later become a single European fund for all depositors.<\/b><\/h3>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">The Deposit Guarantee Fund (DGF) guarantees that, if a bank fails and cannot meet its obligations to its customers, the <\/span><b>savings we have in the country&#8217;s banks by means of a fixed-term deposit are protected up to a maximum of 100,000 euros <\/b><span style=\"font-weight: 400;\">per natural or legal person. Therefore, the country&#8217;s FGD would be responsible for compensating account holders for savings of up to a maximum of 100,000 euros.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to the FGD&#8217;s latest annual <\/span><a href=\"https:\/\/www.fgd.es\/files\/pdf\/FGDEC-Informe-Anual-2020_ES.pdf\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">report<\/span><\/a><span style=\"font-weight: 400;\">, the Spanish state had 4,191 billion euros at its disposal in 2020, against a historical maximum of 958.9 billion euros that customers had on deposit in 2021, according to data provided by the Bank of Spain. In other words,<\/span><b> the total accumulated by the Deposit Guarantee Fund would only cover 0.5% of guaranteed deposits<\/b><span style=\"font-weight: 400;\"> at this date. Hence, the DGF is not in a position to face bank failures.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><b>A new push for banking union<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Faced with this black hole, which is not exclusive to the Spanish FGD and which would prevent it from covering the losses of multiple bank failures, the European Union decided to speed up the banking union of the eurozone member states. The president of the Eurogroup, Paschal Donohoe, presented a <\/span><a href=\"https:\/\/www.consilium.europa.eu\/en\/press\/press-releases\/2022\/05\/18\/joint-press-release-by-the-eurogroup-president-paschal-donohoe-and-finance-minister-sigrid-kaag-following-their-meeting-in-the-hague\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">plan<\/span><\/a><span style=\"font-weight: 400;\"> to eurozone finance ministers in which he proposed two phases for implementing<\/span><b> a mutualised fund to guarantee deposits<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In the first phase, which is expected to come into operation in 2025, <\/span><b>a European guarantee mechanism would be put in place that would support national guarantee funds<\/b><span style=\"font-weight: 400;\">, granting them loans, when, in the event of a bank failure, they do not have sufficient capacity to return guaranteed deposits of up to 100,000 euros or to finance the resolution of the institution. Each country&#8217;s contribution to this European fund would be determined according to the solvency and exposure of the banks to the sovereign debt of its state.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Subsequently, in 2028,<\/span><b> a second phase would come into force, which would consist of moving into a mutualised system<\/b><span style=\"font-weight: 400;\"> in which a common European fund would be responsible for protecting the deposits of all member states. For years, this proposal has been opposed by Germany, which was reluctant to take on the risk of mutualising deposit protection for peripheral countries.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><b>MIEs insure 100% of deposits<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Unlike traditional banks,<\/span><b> financial institutions such as 11Onze, with EMI (Electronic Money Institution) licences, are obliged to guarantee 100% of their customers&#8217; deposits<\/b><span style=\"font-weight: 400;\">. Money that does not form part of the balance sheet of the EMI itself and therefore remains protected by insurance, which guarantees full recovery of savings in the event of the bankruptcy of the financial institution.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In addition, EMI-licensed financial institutions are not allowed to sell high-risk banking products, promote investment products, or recommend credit-risky transactions to customers. However, unlike traditional banks, they are not allowed to use customer deposits for lending. Therefore, <\/span><b>they offer zero risk and ensure that their customers&#8217; savings are 100% safe<\/b><span style=\"font-weight: 400;\">, regardless of the European regulation on deposit insurance.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><b>If you want to know more about superior options to make your money profitable, go to <\/b><a href=\"https:\/\/www.11onze.cat\/en\/?page_id=26828\" target=\"_blank\" rel=\"noopener\"><b>Guaranteed Funds<\/b><\/a><b>. From 11Onze Recomana we propose you the best options in the market.<\/b><\/p>\n\n      <\/div>\n    <\/div>\n  <\/div>\n<\/div>\n\n\n<div class=\"component cards\">\n  <div class=\"container\">\n    <div class=\"row\">\n      <div class=\"col col-xl-8 offset-xl-2\">\n        <h1>If you liked this article, we recommend you read:<\/h1>\n        <div class=\"cards__wrapper\">\n          <div class=\"card\">\n            <a href=\"https:\/\/www.11onze.cat\/en\/magazine\/11onze-insures-deposits\/\" class=\"card-link\" target=\"_self\"><\/a>\n            <div class=\"card-img\">\n              <img decoding=\"async\" src=\"https:\/\/www.11onze.cat\/wp-content\/uploads\/2021\/10\/PODCAST_THUMBNAIL_PSN_FAQS.jpg\" class=\"card-img-top\" alt=\"\">\n                <span class=\"card-category\">11Onze<\/span>\n            <\/div>\n            <div class=\"card-body\">\n              <p class=\"card-title p2\"><strong>\u201c11Onze insures 100% of deposits\u201d<\/strong><\/p>\n              <span class=\"card-time\">1 min read<\/span>\n              <p class=\"card-text small\">11Onze works with what is known as an EMI (Electronic Money<\/p>\n            <\/div>\n          <\/div>\n\n\n          <div class=\"card\">\n            <a href=\"https:\/\/www.11onze.cat\/en\/magazine\/spanish-government-seize-savings\/\" class=\"card-link\" target=\"_self\"><\/a>\n            <div class=\"card-img\">\n              <img decoding=\"async\" src=\"https:\/\/www.11onze.cat\/wp-content\/uploads\/2021\/09\/THUMBNAIL_CALERS_SEMPRE_NOSTRES-800x533.jpg\" class=\"card-img-top\" alt=\"\">\n                <span class=\"card-category\">Economy<\/span>\n            <\/div>\n            <div class=\"card-body\">\n              <p class=\"card-title p2\"><strong>Can the government seize my savings?<\/strong><\/p>\n              <span class=\"card-time\">5 min read<\/span>\n              <p class=\"card-text small\">The new draft National Security Law opens up the possibility that<\/p>\n            <\/div>\n          <\/div>\n\n\n          <div class=\"card\">\n            <a href=\"https:\/\/www.11onze.cat\/en\/magazine\/financial-anxiety-manage\/\" class=\"card-link\" target=\"_self\"><\/a>\n            <div class=\"card-img\">\n              <img decoding=\"async\" src=\"https:\/\/www.11onze.cat\/wp-content\/uploads\/2021\/04\/THUMBNAIL_POST_20.jpg\" class=\"card-img-top\" alt=\"\">\n                <span class=\"card-category\">Finances<\/span>\n            <\/div>\n            <div class=\"card-body\">\n              <p class=\"card-title p2\"><strong>Financial anxiety<\/strong><\/p>\n              <span class=\"card-time\">4 min read<\/span>\n              <p class=\"card-text small\">Nerves, worry, headache or muscle strain. 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