FINANCIAL SAFETY OF THE 'SKOK' CREDIT UNIONS SYSTEM
Security and financial stability is a very important issue in the activity of the Polish 'SKOK' credit unions, which developed a separate system of savings protection.This institutional safety net includes three distinct components. The first one is the supervisory institution - The National Credit Union. It imposes capital requirements and prudential regulations and restrictions. The next element of safety net is lender of the last resort - The Stabilisation Fund of National Credit Union. Its function is to provide liquidity to the solvent but illiquid credit union, should a run against one institution occur. The lender of last resort can also provide liquidity to the SKOK credit union system as a whole, should contagion occur. The last component of safety net is deposit insurance system - Mutual Insurance Company of the SKOK credit unions. In terms of the function of the financial safety net, the deposit insurance plays a key role in preventing contagion. The design and the functioning of safety net of the SKOK credit unions system is the same as in the majority of financial systems including the domestic banking system. The effective safety net affects the prevention and the resolution of crisis disturbance. The justification for the safety net is the need to reduce the risk of a 'bank run' and allow for immediate liquidity where necessary for the SKOK credit unions system. In the end, it is meant as a protection of depositors.
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