In preparation for the upcoming XXL weekend, the board of directors of the Central Bank held an early weekly meeting and decided to update the guarantee limits for bank deposits. Deposits made in pesos are now covered up to $50 million, while deposits in foreign currency are covered up to US$100,000. This decision, outlined in Communication A 7985, is primarily a response to inflation and marks the first update to these limits since December 2022. Previously, deposits in pesos were guaranteed up to $6 million, making this update a substantial 733% increase in coverage.
This insurance applies on a per depositor, per entity basis, with bank deposits guaranteed by Seguros de Depósitos SA (Sedesa) in the event of a bank closure or change of ownership. The Deposit Guarantee Fund was established by Law 24,485 and regulated in April 1995 by decree 540, leading to the creation of Sedesa. Sedesa is a company jointly owned by the Central Bank and financial entities, represented by Caja de Valores.
Financial institutions contribute to the Deposit Guarantee Fund based on the average daily deposits they receive in both pesos and dollars. As of March 21, the balance of the fund was $3,344,653,160,951. This fund ensures coverage for deposits in various accounts such as current accounts, demand accounts, savings accounts, fixed terms, salary accounts, social security accounts, and term investments.
In addition to the insurance coverage, banks are required to participate preventively by making monthly contributions to the fund. These contributions are based on the average daily deposits received in both pesos and dollars, allowing the fund to respond to any risks for depositors. The participation in the trust that oversees Sedesa is determined by the contribution made by each financial institution relative to the contributions collected from the entire Argentine banking system.
Overall, the deposit guarantee insurance system provides a safety net for depositors in banks, ensuring that their funds are protected in case of any unforeseen circumstances. This system plays a crucial role in maintaining trust and stability in the banking sector, providing peace of mind for account holders.