20 years of developing and supporting international deposit insurers

10:44-24/05/2022

The International Association of Deposit Insurers (IADI) is the global standard-setting body for deposit insurance systems. IADI was formed in May 6th 2002 to enhance the effectiveness of deposit insurance systems by promoting guidance and international cooperation.

IADI produces research, guidance and conducts training and technical assistance for the benefit of those jurisdictions seeking to establish or improve a deposit insurance system. IADI’s standards, outlined in its Core Principles for Effective Deposit Insurance Systems, are part of the Financial Stability Board’s Key Standards for Sound Financial Systems, and are used in the Financial Sector Assessment Program (FSAP) reviews conducted by the International Monetary Fund and the World Bank. Members also share their knowledge and expertise through participation in international conferences and other forums.

There is much to celebrate on two decades of accomplishments in fulfilling IADI’s key objectives to: “…to contribute to the stability of financial systems by promoting international cooperation in the field of deposit insurance and to encourage wide international contact among deposit insurers and other interested parties”.

The IADI achievements are the culmination of contributions and hard work of our IADI Members, Associates, Partners, our Secretariat staff, the Bank for International Settlements and fellow standard setters in the international financial system.

IADI has achieved many notable milestones in the second decade, including playing an integral role as a safety-net standard setting body during times of financial crisis; establishing the IADI Core Principles for Effective Deposit Insurance Systems, assisting in the development of deposit insurance systems around the globe, introducing an extensive training and capacity building program for members, building the most extensive global data base on deposit insurance in the world, and the issuance of timely and focused research, guidance and policy papers.

The Core Principles are reflective of, and designed to be adaptable to, a broad range of jurisdictional circumstances, settings and structures. The Core Principles are intended as a framework supporting effective deposit insurance practices. National authorities are free to put in place supplementary measures that they deem necessary to achieve effective deposit insurance in their jurisdictions.

An assessment of compliance with the Core Principles can be a useful tool for jurisdictions that are implementing, reviewing or actively reforming a deposit insurance system. A comprehensive, credible and action-oriented assessment should focus on the deposit insurance system and its relationship to the financial safety-net functions which support it. The assessment of broader safety-net functions (i.e. operating environment) is mostly outside the responsibility of the deposit insurer. But it can have a direct effect on the deposit insurer’s ability to fulfil its mandate. The assessment of a deposit insurance system should identify strengths and weaknesses in the existing deposit insurance system, and form a basis for remedial measures by deposit insurers and policymakers (e.g. government authorities or, if it is primarily a private system, its member banks), after taking into account the structural, institutional and legal features of each national deposit insurance system.

The global financial crisis of 2007-09 and the Covid-19 pandemic have highlighted the crucial role of deposit insurance in promoting financial stability on both the local and global level. Along with enhancing the importance of deposit insurance systems, IADI’s role has become integral in strengthening deposit insurance systems and in the process growing to 91 Members, 9 Associates and 17 Partners. Deposit insurers operate within an ever-evolving global financial system and hence are subject to change themselves. Even in its second year, the pandemic remains a challenge and a source of unprecedented uncertainty affecting businesses, households and also deposit insurers around the globe. So far, financial stability during the pandemic has been remarkably robust. However, the unwinding of COVID-related accommodative policy measures and the effects of the monetary policy aiming at coping with some of the pandemic’s consequences are keeping us alert.

In the line of past years’ trend, recent data affirms that responsibilities of deposit insurers continue to grow. The prevalence of pay-box mandates is continuing to decline to 20% now. Through the increasing share of the pay-box plus mandate, deposit insurers exhibit an increasing role in bank resolution. Significant improvements have been observed around efficiency of payout by deposit insurers. At times overshadowed by the pandemic, other sources of uncertainty to deposit insurers are emerging or have gained further importance. Amongst others, this report focusses on climate change and digital technology. Beyond the pandemic alone, these long-term issues present both risks and opportunities to deposit insurers – provided ones face them in a timely manner. IADI Technical Committees – such as the FinTech Technical Committee – have proven very helpful in this respect.

IADI collaboration with the BIS and Partners such as the International Monetary Fund, the World Bank and the European Forum of Deposit Insurers have been instrumental in promoting compliance with the Core Principles. BIS General Manager Agustín Carstens expressed his recognition of IADI’s achievements and extended his congratulations on its 20th Anniversary: “IADI has become a truly global institution as well as a key element of the Basel process which comprises all the various groups and organisations hosted by the BIS that promotes financial stability. This is a recognition that deposit insurance has become an integral part of the global financial safety net.”

Reflecting on IADI’s accomplishments over the past 20 years, IADI Acting President and Chair of the Executive Council, Alejandro Lopez, Chief Executive Officer of Seguro de Depósitos S.A. SEDESA (Argentina) said: “On the occasion of IADI’s 20th Anniversary, I would like to express my gratitude to the membership, the BIS and all our Associates and Partners for their support and contributions to IADI’s continued growth and success. The importance of deposit insurance and IADI in promoting global financial stability and IADI’s role around the world are now well recognized by the international community.”

IADI have planned the events for the rest of the year to celebrate the 20th Anniversary including a 2-day IADI Conference and international “Deposit Insurance Week” in September and the IADI Annual General Meeting planned for October 2022 in Buenos Aires, Argentina.

In addition, throughout the world many IADI Members are planning their own Anniversary events to celebrate the critical role deposit insurance plays in protecting depositors and in promoting financial stability in their jurisdictions and globally.  

Communication Department