4.2. Contribution rate (CR)

The DGS should determine the CR at least annually. The CR for a given period should be:

𝑝𝑒𝑟𝑖𝑜𝑑𝑖𝑐 𝑡𝑎𝑟𝑔𝑒𝑡 𝑙𝑒𝑣𝑒𝑙 𝐶𝑅 = ∑ 𝑛 𝑖=1 𝐶𝐷 𝑖

At minimum, the DGS should set the periodic target level according to the result of the following formula where the denominator needs to be at least equal to 1:

(𝑚𝑖𝑛𝑖𝑚𝑢𝑚) 𝑝𝑒𝑟𝑖𝑜𝑑𝑖𝑐 𝑡𝑎𝑟𝑔𝑒𝑡 𝑙𝑒𝑣𝑒𝑙 =

𝑚𝑖𝑛𝑖𝑚𝑢𝑚 𝑡𝑎𝑟𝑔𝑒𝑡 𝑙𝑒𝑣𝑒𝑙−𝑞𝑢𝑎𝑙𝑖𝑓𝑖𝑒𝑑 𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑓𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝑚𝑒𝑎𝑛𝑠 (𝑄𝐴𝐹𝑀) 𝑟𝑒𝑚𝑎𝑖𝑛𝑖𝑛𝑔 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑝𝑒𝑟𝑖𝑜𝑑𝑠 𝑢𝑛𝑡𝑖𝑙 𝑡ℎ𝑒 𝑚𝑖𝑛𝑖𝑚𝑢𝑚 𝑡𝑎𝑟𝑔𝑒𝑡 𝑙𝑒𝑣𝑒𝑙 ℎ𝑎𝑠 𝑡𝑜 𝑏𝑒 𝑟𝑒𝑎𝑐ℎ𝑒𝑑 𝑖𝑛 𝑎𝑐𝑐𝑐𝑜𝑟𝑑𝑎𝑛𝑐𝑒 𝑤𝑖𝑡ℎ 𝐴𝑟𝑡𝑖𝑐𝑙𝑒 10(2)𝑜𝑓 𝑡ℎ𝑒 𝐷𝐺𝑆𝐷

Where the DGS has an outstanding liability, and taking into account the minimum requirement under paragraph 16, the DGS should set the periodic target level in order to raise enough contributions in a forward-looking manner so that the resulting levels of qualified available financial means (QAFM) and other available financial means (other AFM) are sufficient for servicing the outstanding liabilities as soon as these liabilities are due, as well as for reaching the target level at the deadline, set out in Article 10(2) of the DGSD. When setting the periodic target level, the DGS should ensure both of the following:

• a. that the foreseeable servicing of the liability does not lead to undershooting vis-à-vis the funding path of QAFM that follows from the application of paragraph 16; and
• b. that by the time the target level has to be reached again in accordance with Article 10(2) of the DGSD, the foreseeable servicing of the liability does not, on its own, reduce the DGS’s QAFM below the target level.

The DGS may set the periodic target level higher than the minimum required under paragraph 16, for example, to reflect the expected evolution of the aggregate covered deposits of the member institutions.

Taking into account paragraphs 16, 17 and 18, the DGS should set the periodic target level to spread out periodic contributions as evenly as possible across time to meet the target level of the DGS.

The competent authority in cooperation with the designated authority may allow the DGS to set a lower periodic target level than the minimum required under paragraph 16 where it concludes that levying a lower periodic target level meets the conditions set out in Article 10(2) subparagraph 4 of the DGSD, and does not lead the DGS to violate the requirement to meet the minimum target level at the deadline set out in Article 10(2) of the DGSD. When allowing the DGS to set a lower periodic target level, the competent authority in cooperation with the designated authority may take into consideration the expected evolution of the aggregate covered deposits of the member institutions.

The competent authority in cooperation with the designated authority may advise the DGS to set a higher periodic target level than the minimum required under paragraph 16 where it concludes that levying a higher periodic target level meets the conditions set out in Article 10(2) subparagraph 4 of the DGSD, and reflecting the expected evolution of the aggregate covered deposits of the member institutions when it sets a higher periodic target level.

Where a DGS levies extraordinary ex post contributions according to Article 10(8) of the DGSD, the DGS should instead determine the CR according to the following formula:

𝑟𝑒𝑞𝑢𝑖𝑟𝑒𝑑 𝑓𝑢𝑛𝑑𝑖𝑛𝑔 𝑖𝑛 𝑎𝑐𝑐𝑜𝑟𝑑𝑎𝑛𝑐𝑒 𝑤𝑖𝑡ℎ 𝐴𝑟𝑡𝑖𝑐𝑙𝑒 10(8) 𝑜𝑓 𝑡ℎ𝑒 𝐷𝐺𝑆𝐷 𝐶𝑅 = ∑ 𝑛 𝑖=1 𝐶𝐷 𝑖