Terrifying question of the day October 23, 2012 at 7:35 am
What do prefunded bank deposit guarantee schemes invest in?
Why terrifying? Because the answer is sometimes they buy the bonds of, or make deposits at, banks they guarantee. In one case it is rumoured that a scheme was reluctant to take over a bank because their own assets were deposited at it and they did not want to take losses. So somewhat tongue in cheek I ask can a deposit guarantee scheme guarantee its own deposits?