Translated version of this PSD: Albanian
The EBRD is considering providing a EUR 10 million standby credit line to the Deposit Insurance Fund of Kosovo (DIFK), fully guaranteed by the Kosovo.
As a standby credit line the EBRD finance is designed to operate similarly to an insurance product. It would provide immediate funds to DIFK, if and when required, to fulfill its mandate in compensating its depositors, but as a standby line would be substantially more cost effective than a loan.
The credit line is a part of DIFK’s contingency financing mechanism for its liquidity needs and will ensure necessary coverage of the insured deposits and thus maintain and ensure confidence in the country’s financial sector. It will also facilitate DIFK’s ability to raise coverage in stages as scheduled in the revised Deposit Insurance Law of Kosovo from EUR 2,000 currently to EUR 5,000 in the year 2018.
The project will help to build confidence in the banking sector as individual deposit insurance coverage will increase.
The specific transition impact is expected to derive from building frameworks for markets. Effective deposit insurance systems are a crucial part of well-functioning banking sectors. By providing depositors with insurance for their deposits, they contribute to financial stability by increasing confidence in local banks.
Well-functioning deposit insurance funds therefore encourage households to deposit their money in these banks and decrease the risk of run on banks in times of crisis.
The DIFK is an independent public entity responsible for the management of the Deposit Insurance Fund, reports to the Central Bank of Kosovo (“CBK”) and is governed by a Management Board.
The Fund enjoys operational and administrative autonomy and functions outside the framework of the Kosovo government structures and the Kosovo civil service.
Its objective is to protect small depositors from losses in case of a bank failure as well as to support the Central Bank of Kosovo in meeting its objective to foster the soundness, solvency and efficient functioning of a stable, market-based financial system.
Up to EUR 10 million.
Up to EUR 10 million.
Categorised FI (2012). There are no adverse environmental and/or social risks associated with the DIFK’s activities; therefore the DIFK will not be required to adopt environmental & social management systems as per PR9. Like all EBRD clients, the DIFK will need to apply PR 2 to its own staff.
It is estimated that up to EUR 300,000 will be needed for a capacity building TC in DIFK for up to 24 months. Capacity building will include strengthening management capacities and establishing best practices.
Deposit Insurance Fund of Kosovo
11/3 Prishtina, 10000
Tel: +381 38 222 505
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