Bank Guarantee Fund – definition of the term, activities

The Bank Guarantee Fund (BFG) is an institution that aims to protect funds deposited by bank customers. The BFG operates under the Bank Guarantee Fund Act and is tasked with ensuring the safety of funds held in banks. Bank customers can rest assured that their funds are safe, as the BFG guarantees their return in the event of bankruptcy.

What exactly is the Bank Guarantee Fund? Definition of the term

The Bank Guarantee Fund is a fund that aims to safeguard the funds deposited by bank customers and their rights. It is funded by the banks themselves and operates within the framework of the Banking Chamber of Commerce.

The BFG protects funds up to €50,000 per person in the event of bank failure. Bank customers can therefore rest assured that their money is protected by the BFG.

Bank Guarantee Fund – what are the rules for protecting funds?

The Bank Guarantee Fund is an institution tasked with protecting savings funds in banks. It operates on the basis of the Bank Guarantee Fund Act. Its purpose is to ensure the safety of depositors’ funds and the stability of the banking system. The Fund collects funds from member banks in the form of contributions. In the event of bankruptcy of a bank, these funds are transferred to creditors, i.e. people who had their savings there. The amount of protection of funds is determined individually for each bank and can range from 100,000 to 5 million euros. Protection of funds is guaranteed by the Bank Guarantee Fund only in the event of bankruptcy of the bank.

It does not cover a situation in which the bank has financial problems, but continues to operate. In such a case, no fund will be able to help. That is why it is so important to use only proven and reputable banks. In summary, the Bank Guarantee Fund is designed to protect savings funds in banks. It ensures the safety of depositors and the stability of the banking system. Contributions to the fund are collected from member banks, and in the event of bank failure, the funds are transferred to creditors.

Financing of the Bank Guarantee Fund

The Bank Guarantee Fund is an institution designed to protect banks from liquidity loss. It is financed by the banks that are its members. If necessary, the fund can provide them with financial assistance in the form of cash or guarantees on their bonds. This allows banks to maintain their operations even if they have problems selling their assets. The Bank Guarantee Fund is therefore an important institution for the stability of the banking sector.

Fund activities

One of the investment funds that can be bought on the market is a mutual fund. It is a unit of participation that is issued by a mutual fund company. The value of a participation unit is based on the value of the assets that are in the fund’s portfolio. Units can be sold and bought on the stock market or directly from the mutual fund company.

Mutual funds are divided into several types depending on the type of assets in which the funds are invested. The most popular types of funds are:

– bond funds – invest in government bonds and corporate bonds;

– money funds – invest funds in banks and financial institutions;

– commodity funds – trade in raw materials (precious metals, oil, etc.);

– equity mutual funds – collect money from individuals and transfer it to companies listed on the stock exchange;

– mixed investment funds – combine several types of assets in their portfolio.

It is worth remembering that when choosing the right mutual fund for you, you should be guided primarily by your personal goals and the period for which you plan to invest the money. In addition, before deciding to purchase units, it is worthwhile to thoroughly familiarize yourself with the investment strategy of a particular fund.

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