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I am not able to find reliable information on this topic. Generally speaking, all deposits in EU banks are secured by national guarantee fund up to about 100k. Image a national fund would fail because the bank lost too much money. Does the EU still guarantee to repay the depositiors up to 100k? Is there some law (any links)? Some law that is on its way? Or are there other mechanisms securing national funds from failing? More specifically, I'm interested in Latvia, which, according to the internet, has a weakend fund system.

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Mind to comment on the downvote? – Franz Kafka Feb 1 at 23:59
I downvoted it because it took me 5 seconds to come up with the link. First result on Google. You were not able to find any information on the topic? Really? – littleadv Feb 2 at 0:26
Thanks. You gave an answer for the Latvian state giving extra guarantees. I was initially, and still am, searching for guarantees by the entire EU. E.g. the EZB jumping in, or some other multinational fund. The Latvian example was of secondary interest. – Franz Kafka Feb 2 at 0:31
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The guarantees are by governments. EU mandates the governments to provide the guarantees, but the governments are those to provide. You can use Latvia as an example, the rest are similar. And you actually said that you're interested in Latvia in particular, not as a secondary interest. – littleadv Feb 2 at 0:42

1 Answer

up vote 3 down vote

The guarantor is the Government of Latvia, the fund is the means of executing that guarantee. Unless the government defaults, the guarantee is valid. See here:

In accordance with amendments to the Deposit Guarantee Law adopted by the Parliament of the Republic of Latvia (Saeima) as from December 16, 2010 compensation of EUR 100 000 (approx. LVL 70 000) is guaranteed to the clients of the Latvian banks (both natural and legal persons) per depositor per each bank (all accounts added together, if several accounts at one bank in one name). The government guaranteed compensation covers deposits, current account balance, salary accounts, savings accounts etc.

further down:

In accordance with the Deposit Guarantee Law, in the occurrence of a case of unavailability of deposits in the Fund for paying out the guaranteed compensations, such payments shall be made from the Government budget via FCMC.

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Tanks. This is interessing. I though the guarantee fund holder is a legal person, and if "he" is bust, then no more money will flow. The goverment backing up the fund makes investments more interesting. – Franz Kafka Feb 2 at 0:01

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