Why deposit guarantee?
The deposit guarantee provides safety to the depositor and reduces the risk that many depositors will withdraw their money at the same time if doubts arise about a bank's financial condition. If one bank is affected by such withdrawals, it can spread to several others. In such a situation, the banks may have problems fulfilling their role in the financial system and economic activity in Norway may suffer. The overall purpose of the deposit guarantee is therefore to contribute to financial stability and the guarantee is thus useful for society. To ensure that the banks are solid and operate safely, they are subject to strict requirements and supervision. Deposit guarantee schemes for savings banks were legislated in Norway in 1924 and for commercial banks in 1961.