The Portuguese Fundo de Garantia de Depósitos (FGD) is a government-backed institution that operates the domestic deposit guarantee scheme, ensuring financial stability and safeguarding the interests of account holders. The primary function of the FGD is to protect depositors in case of a bank failure by providing compensation up to a certain limit, currently set at €100,000 per depositor and per institution. This deposit insurance scheme is vital to maintain public trust in the banking system, prevent bank runs, and ensure the stability of the financial sector in Portugal.
The need for deposit insurance arises from the inherent risks associated with banking activities, such as credit risk, liquidity risk, and operational risk. By providing a safety net for depositors, the FGD helps to minimize the potential negative impacts of bank failures on the economy and financial markets. Additionally, deposit insurance contributes to the overall stability and resilience of the financial system, as it discourages depositors from withdrawing their funds in times of financial stress, thus preventing panic-induced bank runs.
The FGD is overseen by a Management Committee composed of representatives from the Ministry of Finance, the Bank of Portugal, and the Portuguese Securities Market Commission (CMVM). It operates under the regulatory framework established by the European Union’s Deposit Guarantee Schemes Directive (DGSD). The FGD is funded by contributions from its member institutions, which include banks and credit institutions authorized to accept deposits in Portugal. Contact information for the FGD is as follows: