SER advises on introduction of deposit guarantee system in Curaçao

Willemstad, Wednesday, July 19, 2023, the Social and Economic Council (SER) of Curaçao issued an advisory opinion on the introduction of a deposit guarantee system in Curaçao. This advice  was requested  by the Minister of Finance of the leeward island and relates to the implementation of Article 39 of the National Ordinance on the Supervision of Banking and Credit Institutions.

The SER applied a careful research process in order to arrive at this advisory opinion. This process included literature review and a study of similar systems in the region and internationally. Important insights were also gained from discussions with relevant stakeholders, including the minister himself, experts in the banking and credit sectors, and other financial experts.

The deposit guarantee scheme aims to compensate account holders in case a credit institution cannot meet its obligations. This aims to increase the protection of depositors and the stability of the financial system.

In 2021, the Central Bank of Curaçao and St. Maarten (CBCS) and relevant representative organizations already reached a consensus on the introduction of the deposit guarantee system. The system will include rules regarding the structure, supervision, size, and financing of the deposit guarantee system.

The Deposit Guarantee Scheme applies to guaranteed deposits at credit institutions licensed by the CBCS. This includes credit institutions established in Curaçao, subsidiaries of banking groups, and credit institutions operating from a branch in Curaçao.

The deposit guarantee system provides for a total guarantee size of 7% of the total size of guaranteed deposits at all participating credit institutions. This target should be achieved within 10 years of the entry into force of the deposit guarantee system. The cost of the deposit guarantee scheme will be borne by the credit institutions themselves via an annual basic contribution.

The introduction of this draft national decree aims to achieve a stronger and more resilient financial system on the island.