The Federal Deposit Insurance Corporation (FDIC) announced the latest update on the agency’s Deposit Insurance Fund (DIF) health plan.
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In its semiannual update, the FDIC expects the reserve requirement ratio to be on track to reach the legal minimum of 1.35% ahead of the September 30, 2028 deadline.
Since the last update, the DIF reserve ratio has increased by 6 basis points, from 1.15% on December 31, 2023 to 1.21% on June 30, 2024. This is due to DIF balance growth and slower growth than previously. Average growth rate of insured deposits.
“The increase in DIF balances is primarily due to valuations, which reflect a two basis point increase in the original base valuation rate schedule that took effect in early 2023,” said FDIC Chairman Martin Gruenberg. said. “Had this rate hike not been implemented before the failure of the three major regional banks in 2023, costing DIF $19.6 billion, the board would likely have taken a more significant We would have had to consider raising interest rates.” With less time left before the statutory deadline, the reserve requirement ratio will rise to 1.35%. ”
The Federal Deposit Insurance Act (FDI Act) requires the FDIC to adopt a prudential plan if the DIF reserve ratio falls below 1.35%. The reserve ratio is the balance of funds relative to insured deposits.
