Guarantee fund
Capital securely invested with a financial services provider – primarily in top-rated public securities – and specially managed with the purpose of guaranteeing the repayment of issued securities at the end of their term. – An investment fund in which the capital management company managing the fund makes a commitment to investors that each investor will recover a certain percentage of the issue value upon redemption of his or her unit. This commitment applies regardless of the performance of the fund. – A fund company that offers to compensate investors for any losses they suffer in the event that one or more participants default on their obligations. – Another term for a firefighting fund. – The aid set up by the German government in mid-October 2008 to help institutions that had run into difficulties in the wake of the subprime crisis; primarily to prop up the interbank money market, which had almost ground to a halt, and restore the confidence of all market participants. Admittedly, government guarantees have a distorting effect on competition here. It is no longer the creditworthiness of a bank that determines how much interest it has to pay for a new bond. Much more important is the creditworthiness of the government that guarantees the issue. – In the case of insurance, regulations on minimum amounts to guarantee policyholders’ claims, regulated in detail in the Capital Adequacy Ordinance (KapAusstV) and in the Reinsurance Capital Adequacy Ordinance [RückKapV]. – See bank bail-in, bank bail-in, reverse, deposit insurance, guarantee product, guarantee certificate, cross-guarantee system, collateral crisis, moral hazard, pool, collateral duty, repayment vehicle, overflow system. – Cf. BaFin Annual Report 2006, p. 154 (distinction between capital maintenance commitment, maximum loss commitment and performance guarantee; significance of the reference date), Deutsche Bundesbank Monthly Report of August 2009, p. 83 (effect of the guarantee fund in the sense of on government debt), Bafin Annual Report 2013, p. 128 (new regulation of the guarantee fund in the sense of ).
Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent!
University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/