Association for the Guarantee of Deposits Luxembourg

During the Global Financial Crisis (GFC), Luxembourgish officials in October 2008 announced plans to raise the country’s deposit-insurance cap to EUR 100,000 (USD 134,000) and eliminate co-insurance. Prior to the GFC, Luxembourg’s deposit-insurance system covered 90% of deposits in eligible accounts up to EUR 22,222, with depositors responsible for the remaining 10%. On December 19, 2008, the legislature increased the cap to EUR 100,000 and removed the co-insurance, effective January 1, 2009. The Association Pour la Garantie des Dépôts Luxembourg (AGDL), a private deposit-insurance body, administered these changes. All deposit-taking institutions and approved investment firms, except branches of foreign banks, were automatically enrolled with the AGDL. The AGDL covered most types of deposit accounts and select investment instruments. The AGDL was an ex-post deposit-insurance scheme, meaning that the scheme collected no up-front fees. During the GFC, the AGDL paid EUR 310 million to approximately 25,000 depositors. In response to criticism from the International Monetary Fund (IMF) and others, Luxembourg replaced the ex-post scheme with ex-ante funding after the crisis.