International Association of Deposit Insurers
SUMMARY OF THE CDIC INTERNATIONAL DEPOSIT INSURANCE SURVEY (IDIS) RESULTS
Introduction
The Canada Deposit Insurance Corporation has now received responses for the first version of its internet-based International Deposit Insurance Survey (IDIS) Questionnaire. CDIC would like to thank all those countries and deposit insurance systems for participating in the survey.
The purpose of the survey was three-fold. It was designed to gather information from entities that, under law or agreements, provide deposit insurance, depositor protection or deposit guarantee arrangements throughout the world. The information will be shared internationally, this will help policymakers and practioners to draw on approaches being used elsewhere to help them in establishing or reforming a deposit insurance system; and, it will form a body of qualitative and quantitative data that will be updated on a regular basis in order to facilitate practitioner-focused research.
The survey was primarily conducted between April 1, 2002 and September 30th, 2002 with an update in the summer of 2003. It contains over 163 questions covering the following 14 areas on deposit insurance:
- Background Information
- Objectives, Mandates & Powers
- Governance Arrangements
- Human Resources & Infrastructure
- Information Sharing & Interrelationship Between Safety-Net Players
- Membership
- Coverage
- Funding & Fund Management
- Reimbursing Depositors
- Public Information & Awareness Note: Order of sections to left may change
- Risk Assessment & Intervention
- Failure Resolution
- Claims, Recoveries & Estate Management
- Other Issues
Summary of Results
Out of the approximately 80 limited explicit deposit insurance systems currently in place or about to be implemented around the globe, we have received submissions (full or in part) from the following 47 country systems:
- ArgentinaBahamas
- Bosnia and Herzogovinia
- Brazil
- Bulgaria
- Canada
- Chile
- Chinese Taipei
- Colombia
- Cyprus
- Czech Republi
- Denmark
- Ecuador
- El Salvador
- Finland
- France
- Greece
- Hong Kong
- Hungary
- Iceland
- Italy
- Isle of Man
- Jamaica
- Japan
- Jordan
- korea
- Lithuania
- Macedonia
- Mexico
- Nigeria
- Norway
- Peru
- Philippines
- Poland
- Portugal
- Québec
- Romania
- Slovenia
- Spain
- Sweden
- Tanzania
- Trinidad and Tobago
- Turkey
- Uganda
- U.K.
- United States
- Vietnam
- Zambia
The following is a brief summary of the survey results. The full reports and individual country summaries are available at http://www.iadi.org.
Objectives, Mandates & Powers
The most common policy objectives of the deposit insurance systems surveyed were to protect depositors and contribute to financial system stability. Other objectives mentioned included: enhancing the orderly resolution of financial institution failures, protecting payment systems, ensuring that all banks contribute to resolving the cost of failures and financial crisis, and to contribute to the reduction of financial crime.
Deposit insurer mandates varied significantly from country to country. They ranged from relatively narrow "paybox" mandates concentrating on the reimbursement of depositors of failed institutions to systems with broader mandates including risk assessment, risk management, failure resolution and direct regulation and supervision.
Structure and Organization and Governance Arrangements
The survey revealed many different types governance structures among deposit insurers. Legally seperate organizations, relying on a board of directors or governing committee, were quite numerous, although a number of countries opted for setting up their insurer as a department of the central bank, supervisor or government.
There are many variations of private and publicly administered deposit insurance systems in place. Government administered schemes tend to be the most common of those surveyed, followed by systems which combine public and private characteristics.
Human Resources & Infrastructure
The ability to attract and retain qualified employees is a key challenge for most deposit insurers. According to the survey results, this challenge is met either through the use of dedicated employees, access to the human resources of other financial safety-net participants and/or reliance on outside service providers. In most systems, employees of the insurer received some form of statutory indemnification and legal protection.
Information Sharing & Interrelationships between Safety-Net Players
Information sharing and coordination of the activities of the deposit insurer and other safety-net players was a high priority for the majority of deposit insurers. Depending on country circumstances, insurers reported using both formal and informal mechanisms to exchange information and coordinate their activities.
Membership Most of the schemes surveyed require that membership in the deposit insurance system be compulsory and be extended to institutions subject to effective supervision and regulation.
Coverage
The level of coverage provided varied widely. Most systems covered core demand and savings deposit products and excluded coverage of non-deposit products and depositors who were deemed capable of ascertaining the financial condition of banks or who had the resources to purchase such information.
Funding & Fund Management
Funding is provided in many ways for deposit insurance systems such as through government appropriations, levies, premiums assessed against member banks, government/market borrowing or a combination thereof. The majority of systems charged premiums (ex ante) as a way to buildup a fund but retained the authority to charge levies or other charges on their members if required. Other country systems preferred to rely on ex-post levies.
While flat rate premiums are the most common form of application, differential premium systems are becoming increasingly prevalent. In a large number of cases, the deposit insurer was provided with the ability to secure funding for liquidity purposes from governments, its members or directly from capital markets.
Reimbursing Depositors
Most systems attempted to reimburse depositors as quickly as possible. Reimbursement periods varied considerably depending on the quality and security of bank deposit records.
Public Information & Awareness
A feature common to many insurers was the requirement that member institutions be responsible for providing information provided by deposit insurers to the general public. A number of deposit insurers took additional steps to directly communicate to the public through public awareness campaigns and other initiatives.
Risk Assessment & Intervention
Reflecting differing mandates and powers, the deposit insurers surveyed had varying roles in risk assessment and intervention. These ranged from highly developed risk assessment and intervention regimes to systems relying on other safety-net players for these services.
Failure Resolution
An important function of some deposit insurers, particularly those with risk minimizing mandates and associated powers, was a direct role in resolving problem institutions and failures. The extent to which deposit insurers can intervene and resolve failures satisfactorily depended on the objectives of the deposit insurance system and the powers accorded to the insurer and other financial system safety net players.
Claims, Recoveries & Estate Management
Many deposit insurers played a role in the claims and litigation advanced by the failed bank or the receiver/liquidator against directors, officers, auditors and other parties related to the bank failures.
Looking Ahead
While the CDIC survey represents a major step forward in the development of an on-line data base, not all the systems contacted were able to respond in a comprehensive and detailed manner. In the longer term, the success of the survey will be dependent on an increase in the level of participation from all deposit insurers. This will ensure that the database will become a valuable tool for practitioners and researchers and a method of increasing awareness about yours and other deposit insurance systems throughout the world.
We look forward to getting back to you in 2004 to give you the opportunity to up date your profile and encourage more country systems to participate in this initiative.
Should you have any questions or comments please contact Mr. David Walker at dwalker@cdic.ca.