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Challenges of Funding a DIS

In: Deposit Insurance Schemes

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  • Djurdjica Ognjenovic

Abstract

The most challenging issue for any DIS is to establish and manage a credible and robust DIF which would enable fast payout of covered deposits in case of a bank failure and enhance depositors’ confidence. Deposit insurers face funding challenges on a daily basis when analyzing the sufficiency of funds and assessing risks. This chapter introduces the concept of an ex ante DIF and explains different types and sources of funding for the DIS. It provides examples how to determine the annual level of regular premium and what emergency funding options are at disposal to the DIS when facing liquidity and solvency issues. It explains the differences between linear and risk-based premium and methods of applying risk assessment techniques when conducting regular financial planning and cash flow projection of its funding needs and options.

Suggested Citation

  • Djurdjica Ognjenovic, 2017. "Challenges of Funding a DIS," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Deposit Insurance Schemes, chapter 3, pages 105-155, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-3-319-51143-6_3
    DOI: 10.1007/978-3-319-51143-6_3
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