Effective January 1, 2025, significant enhancements have been made to the Deposit Guarantee Scheme for the Caribbean Netherlands (DGS BES). These updates include an increased coverage limit, the removal of residency requirements, and the introduction of a funding mechanism. The changes aim to bolster financial stability and enhance consumer protection.

Key Changes to the Scheme

The Deposit Guarantee Scheme, first introduced in 2017, underwent a scheduled evaluation to assess its effectiveness. The review found that the previous framework did not fully achieve its intended objectives. The most notable updates are:

1. Increased Coverage Limit
   The maximum coverage amount has been raised from USD 10,000 to USD 25,000, ensuring that over 90% of account holders are fully protected. This adjustment aligns with the coverage levels in the European Netherlands and meets international standards set by the International Association of Deposit Insurers (IADI).
2. Elimination of Residency Requirement
   The residency requirement has been removed, allowing all account holders at banks in the Caribbean Netherlands to benefit from the scheme, regardless of their place of residence.
3. Introduction of a Funding Mechanism
   Banks are now required to contribute in advance to a dedicated fund, ensuring the availability of resources to finance compensation payments in the event of a bank failure.

Administration and Coverage

The scheme is administered by De Nederlandsche Bank (DNB) and provides free protection for eligible deposits. Coverage applies to deposits ranging from USD 0.01 to a maximum of USD 25,000 per person or business, per bank. This includes checking accounts, savings accounts, and term deposits. In the event of a bank failure, DNB will compensate eligible account holders within the limits of the scheme.

Strengthening Financial Security

These amendments mark a significant step toward reinforcing financial security and trust for account holders in the Caribbean Netherlands. By increasing protection levels, removing residency barriers, and establishing a robust funding mechanism, the updated Deposit Guarantee Scheme ensures stronger safeguards for individuals and businesses alike.

BES Reporter