However, this provides incentives to build up high levels of reciprocal claims, above all within the collective. A balance needs to be struck here between an internal redistribution of liquidity and an excessive build-up of internal financial relations, which could be a source of stability risk. The right incentives are therefore crucial for the stability of a protection scheme.
Specifically, this means that the protection system as a whole must be able to manage risks. In this vein, the Capital Requirements Regulation requires institutional protection schemes to have centralised risk management. It is only through this centralised structure that liability and control can be brought into balance.