Remarks: 17th Islamic Financial Services Board Summit

Remarks by Eva Hüpkes, Secretary General of IADI, during the 17th Islamic Financial Services Board Summit.

It is a true honour to be invited to address this distinguished gathering at the 17th IFSB Summit.

Allow me to first extend my sincere thanks to Dr. Ghiath Shabsigh, Secretary-General of the Islamic Financial Services Board, for this kind invitation and for the IFSB’s continued leadership in advancing the soundness and stability of the Islamic financial services industry worldwide.Equally I would like to express my appreciation to His Excellency Ahmed bin Jaffer Al-Musalmi, Governor of the Central Bank of Oman, for the generous hospitality and for hosting this important summit.

Being in Muscat, where traditional souks stand alongside modern infrastructure, highlights the interplay between heritage and progress. It also reminds us of a broader challenge: how to preserve foundational frameworks while adapting them to the imperatives of a rapidly changing global landscape. This duality resonates closely with the theme of the summit, ‘Islamic Finance for the Future: Breaking New Ground for Global Impact’.

The Core Principles

In this context, allow me to talk about the core standard for which the International Association of Deposit Insurers (IADI) is responsible: the Core Principles for Effective Deposit Insurance Systems. These principles have recently been updated to address the shifting realities and complexities of the evolving financial landscape.

Let me briefly trace the lineage of this essential standard. The first Core Principles were born from the crucible of the 2007–2009 global financial crisis, jointly issued by the International Association of Deposit Insurers (IADI) and the Basel Committee on Banking Supervision in June 2009. That crisis taught us painful but invaluable lessons about the critical role deposit insurance plays in maintaining depositor confidence and financial stability when the system comes under severe stress.

The 2014 revision built upon those foundations, incorporating the lessons learned and strengthening the framework to align it with the then recently adopted Key Attributes of Effective Resolution Regimes of the Financial Stability Board.

Now, a decade later, four principal imperatives guided the 2025 revision:

1. The March 2023 banking turmoil—the largest episode of systemic stress since the global financial crisis—provided fresh, urgent lessons. The rapid failure of Silicon Valley Bank, Signature Bank, and First Republic Bank in the United States, followed by stress at Credit Suisse, demonstrated how quickly depositor confidence can evaporate in the digital age. Social media amplified concerns at unprecedented speed. Uninsured depositors moved funds with a few mobile phone swipes. These events underscored the need for deposit insurance systems, resolution frameworks, and supervisory regimes to work seamlessly together as an integrated financial safety net.

2. Technological transformation has fundamentally altered the deposit-taking landscape. Fintech innovations, digital banking, mobile money, and new payment systems have changed both how deposits are gathered and how depositors behave. The speed of potential deposit flight has accelerated dramatically. Our Core Principles must address this new reality while remaining technology-neutral and adaptable to future innovations.

3. The increased involvement of deposit insurers in resolution processes across many jurisdictions required us to clarify how deposit insurance and resolution frameworks interact to protect depositors effectively while maintaining financial stability. Different jurisdictions organise these functions differently, and our Core Principles must accommodate this diversity while ensuring the same high-quality outcomes.

4. We recognised the need to make the Core Principles more forward-looking and aspirational, while maintaining clear baseline expectations. This led us to introduce the concept of “Additional Criteria”—voluntary best practices that exceed current baseline expectations but may contribute to the robustness of deposit insurance frameworks. This innovation allows jurisdictions to see not just where they stand today, but where they might aspire to be tomorrow.

Significant Changes Incorporated

Let me highlight some of the most significant changes we have incorporated:

Enhanced Financial Safety Net Integration

Perhaps the most important evolution is our explicit emphasis on the deposit insurance system as part of a holistic financial safety net. We have moved beyond viewing the deposit insurer in isolation to recognising that the deposit insurance function must interact effectively with supervision, resolution, lender of last resort functions, and public backstop arrangements—regardless of how jurisdictions organise these functions institutionally.

The Core Principles now clearly differentiate between principles that apply primarily to the deposit insurer (Principles 2–10) and principles that apply to the broader deposit insurance system through effective interaction with other financial safety net participants (Principles 11–18). This structure accommodates the diversity in how jurisdictions organise their financial safety nets—from fully integrated models to specialised approaches—while ensuring the same critical outcomes are achieved.

New Principle on Business Continuity Management

We have introduced an entirely new Core Principle on business continuity management (Principle 4), reflecting lessons learned from operational disruptions including cyber incidents, natural disasters, and pandemics. Deposit insurers must be able to withstand, adapt to, and recover from severe operational disruptions. This principle ensures resilience is built into the very foundations of deposit insurance systems.

Strengthened Crisis Preparedness and Management

The 2023 banking turmoil revealed gaps in crisis preparedness. The revised Principle 11 now expects deposit insurers to participate in institutional frameworks for system-wide crisis preparedness and management, including regular contingency planning and simulation exercises with other financial safety net participants. Crisis communication plans must ensure comprehensive and consistent public awareness—critical when depositors are making split-second decisions based on fragmentary information they encounter on social media.

Enhanced Resolution Framework

Principle 14 on failure resolution has been substantially strengthened to ensure resolution regimes provide a broad range of powers and tools—not just liquidation and payout, but also tools that facilitate continuity of access to insured deposits. The period during which insured depositors are without access to their funds should be minimised, whether through traditional reimbursement or through resolution measures that maintain access to deposits.

Accelerated Reimbursement Timeframes

Principle 15 sets a clear expectation: most insured depositors should be reimbursed within seven working days of the reimbursement being triggered. For jurisdictions not yet capable of meeting this target, a credible plan with clear timelines and measurable deliverables is required. Moreover, we have introduced an Additional Criterion—aspirational but achievable over time—of three-day reimbursement for the most advanced systems. In the digital age, prolonged inaccessibility to insured deposits is becoming less tolerable.

Clarity on Use of Deposit Insurance Funds in Resolution

Principle 16 now provides explicit guidance on when and how deposit insurance funds may be used in resolution measures beyond simple reimbursement. This includes clear safeguards: the deposit insurer must be involved in resolution decision-making from an early stage, net contributions cannot exceed the costs of liquidation and payout, and ex post independent audits must verify compliance with the terms and conditions for fund usage.

Recognition of Fintech and Digitalisation

Throughout the revised Core Principles, we have woven in considerations of how fintech and digitalisation impact deposit insurance. From the amplification of traditional risks to the potential for more rapid propagation of financial stress through digital channels, from the opportunities for faster reimbursement through digital payment systems to the challenges of operational resilience when relying on third-party technology providers—these considerations now inform multiple principles.

The IADI Core Principles and Islamic Finance

These Core Principles are not mere recommendations or suggestions. The Core Principles for Effective Deposit Insurance Systems are the international standard for deposit insurance. While the Core Principles are designed to be adaptable to diverse jurisdictional circumstances, settings, and institutional structures, they maintain rigorous expectations for outcomes. Different paths may lead to the same destination.

One size does not fit all—and nor should it. The financial systems of the world are beautifully diverse, reflecting different legal traditions, cultural contexts, economic structures, and philosophical foundations.

Among the most significant expressions of this diversity is Islamic finance, which now constitutes a substantial and rapidly growing segment of the global financial system. Islamic financial institutions operate in over 60 jurisdictions, with total assets approaching USD 4 trillion. In many IADI member jurisdictions, Islamic banks and Islamic windows of conventional banks serve millions of depositors whose savings must be protected just as surely as those of depositors in conventional banks.

Both IADI and IFSB, as standard setters, embody the shared commitment to bolstering the resilience of the financial system, each contributing to the overarching objective of safeguarding financial stability through sound practices and robust frameworks. This collaboration is particularly vital in addressing the distinctive needs of Islamic finance, as reflected in Section IV.4 of our revised Core Principles, which explicitly recognises Islamic Deposit Insurance Systems. We acknowledge that, while the general Core Principles set a benchmark, they do not specifically address the unique design features of Islamic deposit-taking. These unique features include the prohibition of riba (interest) for Islamic deposits, which operate through profit-sharing (mudarabah) mechanisms and safekeeping (wadiah) arrangements, not fixed interest.

We fully acknowledge these realities. The IFSB is uniquely positioned, with its expertise, to provide guidance on implementing the Core Principles in a manner that ensures compliance with Shari’ah principles. For our part, IADI stands ready to collaborate in ensuring that Islamic deposit insurance is both effective and fully aligned with the IADI Core Principles. We look forward to working closely with the IFSB, particularly through our shared membership and, notably, the IADI Technical Committee on Islamic Deposit Insurance, which is currently chaired by Mr Mohamed Mahroui.

In Closing

As I close, let me step back from the technical details and offer some thoughts about the future of deposit insurance in this complex world.

We live in an era of extraordinary change. Technology is transforming how banking is conducted. New forms of money—from e-money and stablecoins to tokenised deposits—are emerging. In this environment, deposit insurance must be more resilient, more adaptable, and more forward-looking than ever before. The 2025 Core Principles provide a framework for this evolution.

The real work begins now, as jurisdictions assess their deposit insurance systems against these enhanced standards, identify gaps, and undertake necessary reforms. To support this effort, IADI has recently initiated work to update its handbook for conducting assessments of compliance with the Core Principles, with the aim of having a draft for public comment by the end of this year.

I am confident that through our collective commitment and collaboration—including through the partnership between IADI and the IFSB—and with the support of policymakers who recognise the critical importance of effective deposit insurance systems—we will continue to protect depositors, maintain financial stability, and build more resilient financial systems across our diverse jurisdictions.

Thank you for your attention.