About the Crisis Resolution Fund
The Crisis Resolution Fund was established under the Act No 374/2015 Coll., on Financial Crisis Prevention and Resolution as a mechanism to prevent crisis situations where there would be a risk of a financial institution being unable to meet its commitments to beneficiaries under statutory and contractual terms. The financial resources of the Fund may be used in situations when the stability of any financial institution is threatened, so that it is not necessary to end its operation and commence the payout of deposit compensation to its clients.
The use of Crisis Resolution Fund resources is decided on by the Czech National Bank, the resolution authority. This measure can only be applied if the institution is failing or if its failure can reasonably be anticipated, there are no other supervisory or private sector measures that would prevent the institution's failure in the short term, and if the resolution of the crisis is in the public interest. The objective is to strengthen the stability of the financial sector, minimize costs and damage and, if possible, eliminate the use of public funds.
Contributions to the Crisis Resolution Fund are paid by all banks, building savings banks, cooperative credit unions with their registered office in the Czech Republic, branches of banks with their registered office outside EU and selected investment firms.
The Crisis Resolution Fund is, under the Act, composed of two funds:
- The Contribution Fund, formed from regular or extraordinary contributions from financial institutions, from financial resources obtained from the market, loans from other crisis resolution mechanisms, or state aid.
- The Operational Fund, formed primarily from proceeds from the investment of financial resources in the Crisis Resolution Fund and proceeds from completed bankruptcy and liquidation proceedings.