The Central Bank proposed to reduce the limit of reimbursement for deposits in the currency of unfriendly countries
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The Central Bank plans to ensure that banks’ expenses on paying contributions to the mandatory deposit insurance fund are commensurate with the risks they take. For banks, it is proposed to create incentives to maintain sustainable long-term liabilities necessary to finance the economy. For this purpose, the Bank of Russia proposes to reduce the limit of compensation for deposits in the currency of unfriendly states.
“The procedure for assessing the financial position of a bank participating in the deposit insurance system does not take into account that banks with different risk levels and management quality pay insurance premiums at a single rate. The basis for calculating contributions is determined based on the volume of insured deposits attracted by the bank, and is not limited by the limit of insurance compensation for them, ”the Central Bank explains in material “Perspective directions for the development of banking regulation and supervision”, why there are not enough existing tools.
To resolve the situation, among other things, the regulator proposes “to work on the issue of reducing the limit of reimbursement for deposits in the currency of unfriendly states.”
The deposit insurance system (DIS) is a state mechanism for protecting money in bank accounts. The main idea of the CER is to make quick payments to depositors from an independent financial source. Insurance premiums are the same for all DIS member banks and are payable by the bank on a quarterly basis.
In March, Prime Minister Mikhail Mishustin signed an order establishing a list of countries committing unfriendly actions against the Russian Federation. It included all G7 countries, all EU countries and Ukraine. Then the list of unfriendly countries introduced Central Bank. Officially unfriendly countries appeared in Russia in May 2021. Then the list expanded.
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