Núñez: Guarantee funds essential for financial stability
Soledad Núñez, Deputy Governor of the Bank of Spain, emphasized the crucial role of investment guarantee mechanisms at the 25th anniversary of FOGAIN. She highlighted their importance for financial stability and investor confidence in a rapidly evolving financial landscape.
FOGAIN: A quarter century of evolving safeguards
FOGAIN, Spain's Investment Guarantee Fund, was established twenty-five years ago to protect investors and strengthen financial market security.
Its clear mission has been to offer robust support to those entrusting their confidence in financial entities, ensuring investments are safeguarded even in challenging times.
Over this quarter-century, FOGAIN has continuously evolved, adapting to regulatory changes, digitalization, and new market circumstances while maintaining its commitment to investor interests and system robustness.
Alongside the Deposit Guarantee Fund, such mechanisms serve as essential pillars of the financial system, providing a crucial safety net for small savers and minimizing insolvency risks.
This protection is vital during uncertainty, reinforcing overall sector stability and fostering public faith in financial institutions.
Confidence, as the cornerstone of the financial architecture, drives financial activity, encourages investment, and enables the system to operate efficiently and stably.
DGFs: More than a payout box
Recent European regulatory changes have significantly enhanced the role of Deposit Guarantee Funds (DGFs) in banking crisis management.
A June 2025 political agreement revised the framework, expanding the resolution perimeter to more credit institutions and facilitating access to resolution funds via DGF contributions.
Under the new framework, investors and creditors of a distressed bank must absorb losses equivalent to at least 8% of total liabilities and own funds to access external funds.
The 'bridge the gap' mechanism allows DGFs to help meet this 8% minimum loss absorption when a deposit-funded bank lacks sufficient capacity, ensuring smoother business transfers and orderly market exits.
DGFs are now also permitted for preventive or alternative measures, transforming them into more than just a payout box in cases of bank insolvency.
Cultivating trust in a digital age
The speech underscores the ongoing need for constant adaptation in a rapidly digitalizing and evolving regulatory landscape.
FOGAIN's quarter-century evolution and the recent EU reforms expanding DGFs' roles demonstrate a proactive and essential commitment to maintaining financial trust.
This continuous effort to innovate and strengthen collaboration is vital for fostering economic growth, creating employment, and ensuring social well-being.