(i) Minimum contribution

The DGS may require member institutions to pay a minimum contribution (MC) irrespective of the amount of their covered deposits by applying either of the following modified calculation formulas to calculate the individual contributions:

• a. In cases where the DGS requires member institutions to pay a part of their total periodic contributions in the form of a minimum contribution in addition to a risk-based contribution:

𝐶 𝑖 = 𝑀𝐶 +(𝐶𝑅 𝑀𝐶1 ∗𝐴𝑅𝑊 𝑖 ∗𝐶𝐷 𝑖 ∗µ)

Where:

MC = Minimum contribution, which is identical for all member institutions; and

𝑝𝑒𝑟𝑖𝑜𝑑𝑖𝑐 𝑡𝑎𝑟𝑔𝑒𝑡 𝑙𝑒𝑣𝑒𝑙− 𝑛∗𝑀𝐶 𝐶𝑅 𝑀𝐶1 = ∑ 𝑛 𝑖=1 𝐶𝐷 𝑖

• b. In cases where the DGS requires member institutions to pay either a risk-based contribution or a minimum contribution, whichever is higher:

𝐶 𝑖 = 𝑀𝑎𝑥 {𝑀𝐶 ;(𝐶𝑅 𝑀𝐶2 ∗𝐴𝑅𝑊 𝑖 ∗ 𝐶𝐷 𝑖 ∗𝜇 ∗ )}

Where:

𝑀𝐶 = Minimum contribution, which is identical for all member institutions;

x = The number of institutions that should only pay the minimum contribution.

The method to determine x is described in Annex 1;

𝑝𝑒𝑟𝑖𝑜𝑑𝑖𝑐 𝑡𝑎𝑟𝑔𝑒𝑡 𝑙𝑒𝑣𝑒𝑙− 𝑥∗𝑀𝐶 𝐶𝑅 𝑀𝐶2 = ∑ 𝑛 𝑖=𝑥+1 𝐶𝐷 𝑖

and

µ ∗ = ∑ 𝑛 𝑖=𝑥+1 ∑ 𝑛 𝑖=𝑥+1 (𝐴𝑅𝑊 𝐶𝐷 𝑖 ∗𝐶𝐷 𝑖 𝑖 )

When setting a minimum contribution, the DGS should take due care of the risk of moral hazard inherent in setting fixed contributions and the risk of creating barriers for entering the market of banking services.