El Canut, 11Onze’s finance super app, is now a reality that will let you have accounts in different European states. We are launching with a Bulgarian IBAN. Why Bulgaria? Is your money insured?

IBAN (International Bank Account Number) was developed by the European Committee for Banking Standards (ECBS), and replaces what was previously known as the Customer Account Code (CCC). This is a set of alphanumeric elements that identify the bank account of a customer of any banking entity.

This code, together with the creation of the SEPA (Single Euro Payment Area), which comprises the European Union plus Iceland, Liechtenstein, Norway, Switzerland, and Monaco, allows companies and individuals to use a system of collections and payments in exactly the same way and with the same ease, regardless of whether it is a national or international transaction, always within the SEPA area.

Security and solvency

Before the birth of the IBAN code, and the regulations that govern it, there were often difficulties when making payments on an international scale. This was due to the fact that the account identification system was only effective at a national level, and therefore it was not easy to identify the origin of an international account, with the subsequent risk of fraudulent transactions.

But another aspect that is just as important, if not more so, is the security of our savings. In this sense, the wave of fintechs and neobanks has brought EMIs (Electronic Money Institutions) to the forefront. These are entities that operate with digital currency and cannot make use of the money deposited by their clients to make loans or any other type of risky transaction. Moreover, these deposits are not part of the company’s balance sheet, so in case of bankruptcy, the deposits are guaranteed. In addition, EMIs have insurance that guarantees 100% of the deposits without the limitation set by the Deposit Guarantee Fund. EMIs therefore offer zero risk to savers’ deposits.

As for traditional banks, it is the central bank of the country where the IBAN is based that secures our money. Thus, for example, if our money is in Spain, the Bank of Spain, in case of emergency, would have to have sufficient reserves to cover all the current accounts in the country. Specifically, in Spain, the Fondo de Garantía de Depósitos de Entidades de Crédito guarantees up to 100,000 euros per customer. In addition, banks now have supplementary insurance to deal with any solvency problems.

In this regard, the European Central Bank collects data on the countries that have the most solvent central banks, i.e. those that offer the most protection in the event of the failure of one or more banks. If the bank where we have deposited our savings goes bankrupt, it is the central bank of that country that is responsible, but certainly, many do not have sufficient solvency to deal with such a situation. For this reason, the law makes it compulsory for banks to have supplementary insurance.

The index used by the European Central Bank to establish this classification, which is similar to the so-called cash ratio, is a formula that puts liquid reserves in relation to deposits and is expressed as a percentage. If we look at the data in the graph below, which shows the common equity ratio of credit institutions, Spain is well below the ranking headed by other countries, such as Bulgaria.

Data that we at 11Onze consider important when it comes to giving our community the freedom to choose where they open their accounts with the best guarantees.

11Onze is becoming a phenomenon as the first Fintech community in Catalonia. Now, it releases the first version of El Canut, the super app of 11Onze, for Android and Apple. El Canut, the first universal account can be opened in Catalan territory.