Date Published: Wednesday, 15-December-2021 10:32:49 AM
A well functioning financial sector safety net is an essential elemement for a financial sector. It guarantees the safety of the banking system and its deposits, inspires confidence in the system and safeguards against any shocks. The global financial crisis of 2008/9 highlighted, among other things, the need for countries to strengthen one pillar of this safety net, their deposit insurance frameworks1 , to ensure a high degree of depositor confidence in the financial system.
As a direct response to the crisis, IADI (the International Association of Deposit Insurers2 ) published first jointly with the Basel Committee for Banking Supervision in 2009 the Core Principles for Effective Deposit Insurance Systems. The Core Principles (updated in 2014) cover a wide range of issues - including mandate and powers, funding, payout capacity and contingency planning as well as crisis management of the DIS and its staff. The Core Principles stipulate a minimum standard against which deposit insurance schemes around the world benchmark themselves. Since its publication, the Core Principles have supported many deposit insurance related reforms around the world and have been instrumental in setting up new schemes.