SPWG Leader	Project Manager for the SPWG	Fee Subgroup Leader
Patrick Déry Autorité des marchés financiers (Québec, Canada)	Julien Reid Autorité des marchés financiers (Québec, Canada)	Carlos Colao Fondo de Garantía de Depósitos de Entidades de Crédito (Spain)

One of the main objectives was to maintain transparency and inclusiveness throughout the process implemented by the SPWG. Hence, during this period, the SPWG and the Fee Subgroup held numerous meetings with their respective group, and also with all of IADI Members by means of several Reaching out and Debriefing sessions.

• From late June 2020 to the end of the project on 12 March 2021, no less than 20 meetings took place (ie. 7 SPWG, 5 Fee Subgroup, 3 Reaching out and Debriefing sessions, 4 EXCO and 1 AGM). The high attendance rate observed at these meetings demonstrated the interest of IADI Members in the work of the SPWG.

To fulfill its mandate, the SPWG set up a strategic mapping process framed around four pillars:

• Pillar 1: Members’ expectations, mainly the Survey to IADI Membership
• Pillar 2: SPWG and Council Committees’ contribution (Strategic Brainstorms sessions)
• Pillar 3: SWOT Analysis
• Pillar 4: Benchmarking Analysis with other standards setters

These four pillars were then used as input to develop the High-level Strategic Map, ie. the backbone of the next Strategic Plan (2022-2026).

The Fee Subgroup, on its side, identified four principles to follow when designing alternatives to the current IADI Differentiated Fee Model (DFM): transparency, fairness, simplicity and sustainability. To fulfill its mandate, based on the Survey responses from the IADI Membership, the Fee Subgroup carried out a benchmark analysis with another standard setter, established working lines and then developed different fee model options to review the current DFM. 

Work accomplished by the SPWG 

At the end of the information gathering phase in fall 2020, SPWG members followed a methodic and rigorous approach to identify the broadest consensus possible on the various matters they were mandated to cover. They transformed and summarised the massive quantity of information and opinions gathered into high-level, Strategic Plan material, by providing in December 2020, their “Individual Strategic Map”. This generated the “Strategic Map”, a Master Spreadsheet containing all the information provided by the respondents (16 in total including the Secretariat).

In January 2021, the “Strategic Map” went through a rigorous comment and review process in order to be refined. During this process, the specific wording of the document was also edited by and vetted with the Council Committees Chairpersons and the Secretary General to make sure there were no duplications or unclear expectations. This process resulted in the “High-Level Strategic Map” which includes the four Strategic Goals, along with objectives and means of accomplishment, which constitutes the SPWG core recommendations to EXCO with respect to mandate A. 

The proposed four Strategic Goals

Work accomplished by the Fee Subgroup

In December 2020, the Fee Subgroup finalised their simulations on potential fee model options for reviewing the current DFM. In total, seven different fee model options were developed. Five of them following a discrete model and two of them following a continuous model. After having been presented and discussed among the Fee Subgroup, those options were reviewed by the SPWG members in mid-January 2021. After their review, the SWPG set out some working assumptions to narrow down the number of options to 2 or 3 to be submitted for consideration to EXCO.

At the end of January 2021, taking into account all the comments and inputs received by the SPWG members, two final model options based on GDP and GDP per capita (Options A and B) were adapted to the working assumption validations made by the SPWG members.

• Option A: This option follows a discrete approach as the current DFM and uses the same 2 parameters (ie. GDP and GDP per capita of the jurisdiction which each IADI member belongs) as well, although Option A offers higher granularity. Thus, the number fee buckets increase from the current 9 (3-by-3 GDP & GDP per capita matrix) to 25 (5-by-5 GDP & GDP per capita matrix). The Option A allocates the same current 4 fee categories among the different 25 buckets. This option would help to solve issues related to small DIS with high GDP per capita levels, so they are allocated to lower fee categories in comparison to the current DFM in place.
 
• Option B: This option follows a continuous approach. The fee is calculated as the sum of a Base fee and a Variable fee – the latter using a logarithm formula based on GDP and GDP per capita as independent variables –. One of the advantages of the continuous approach is that the distribution of fee levels among IADI Members will automatically lead to match the IADI budget (no surplus of deficit would arise). However, this involves lower visibility on fee levels by IADI Members, as the fees allocated can vary from one year to another (higher volatility on fees).

Conclusion of the work in the SPWG and the Fee Subgroup

During the 66th EXCO Meeting held on 3 February 2021, the EXCO formally acknowledged that the SPWG and Fee Subgroups had delivered on their mandates, approved in principle the content of the “High-Level Strategic Map”, and required the SPWG to table its final report to the next EXCO Meeting.

The SPWG and Fee Subgroup presented their final report at the 67th EXCO held on 12 March 2021. These reports with their recommendations and options reflected the broadest consensus possible within IADI, and the reports reflect what most IADI Members want for the Association, namely to move forward and focus on IADI’s core business activities and to do so in a more transparent and efficient manner.

During the meeting, the EXCO members approved the SPWG report and its recommendations so they will be taken into account for the drafting of the new Strategic Plan 2022-2026. With regards to the Fee Subgroup, the EXCO approved the Fee Subgroup report and endorsed the Option A as the new DFM for the period 2022-2026. The EXCO also enabled further technical exploration on fee models, through the creation of a Technical Committee under the Europe Regional Committee (ERC).

The SPWG and the Fee Subgroup, having duly delivered on their mandates, were then disbanded.

APPENDIX 1: Membership Composition

Figure 1: SPWG's composition (22 members)

Figure 2: Fee Subgroup's composition (20 members)

  1) Delegation from Mr Umaru Ibrahim, NDIC (Nigeria), in his capacity as Chair of the ARC

  2) Delegation from Mr Seongbak Wi, KDIC (Korea), in his capacity as Chair of the APRC

  3) Delegation from Mr Giuseppe Boccuzzi, FITD (Italy), in his capacity as Chair of the ERC

  4) Delegation from Ms Svitlana Rekrut, DGF (Ukraine), in her capacity as Chair of the EARC

  5) Delegation from Ms Chantal Richer, CDIC (Canada), in her capacity as Vice Chair of the RCNA

• Secretariat Report on the Financial Statements for FY 2020/21: Review completed and submitted to EXCO for approval.

• IADI Audited Financial Statements for FY 2020/21: Review completed and submitted to EXCO for approval. Audit process finalised in conjunction with Treasurer, MRC, Secretariat and PwC (External Auditor).

• Investment Guidelines Report (including Investment Guidelines for FY 2021/22) and Investment Policy: Review completed. Investment Guidelines were approved by EXCO.

• Accounting principles and audit procedures: Review of the current principles and procedures in progress.

• IADI Enterprise Risk Management and Internal Control Framework: Review of the revised framework paper in progress.

• Contribution to the new working group on monitoring IADI’s internal control and goal achievements.

• New CPRC Vice Chairperson: Ms Chantal Richer (CDIC Canada) was appointed as the Vice Chairperson for a three-year term.

• New Members of the Committee: Alfredo Pallini (FITD, Italy), Chantal Richer (CDIC Canada) and Hidenori Mitsui (DICJ, Japan)

• The Annual Policy and Research Plan for the Fiscal Year 2021/2022 prepared by the IADI Research Unit in collaboration with the CPRC Secretariat was approved by the CPRC and the EXCO in March.

• The updated Guidelines for the Development of IADI Research, Guidance and the Core Principles were approved by the EXCO and posted on the IADI public website in March 2021. The revised Guidelines focused on five major enhancements including:

  • Providing greater clarity for the definition and research process for each type of papers;
  • Streamlining the review and approval processes to expedite the issuance of papers;
  • Ensuring properly addressing of comments received by using a standard comment matrix;
  • Ensuring the inclusiveness of members’ participation in different types of papers;
  • Enhancing communication among CPRC members and coordination with RU.

• Papers are being developed by the following CPRC Technical Committees:

  • Islamic Deposit Insurance Technical Committee:

    • The IADI-IFSB Core Principles for Effective Islamic Deposit Insurance Systems (CPIDIS) were approved by the EXCO of the IADI in March 2021. Joint publication with the Islamic Financial Services Board (IFSB) was announced in July 2021.

    • A Joint Webinar on CPIDIS was held by the IADI, the IFSB and the Arab Monetary Fund on 2 June 2021.

    • Research Paper on Shariah Approaches on Resolution of Islamic Banks is a work in progress. The paper is scheduled to be reviewed by the CPRC in the third quarter of 2021.

  • Resolution Issues for Financial Cooperatives Technical Committee: the draft Guidance Paper on “Ways to resolve a financial cooperative while keeping the cooperative structure” was reviewed by the SPRA, the Advisory Panel and the CPRC in the second quarter of 2021, respectively. The paper is scheduled to be reviewed by the EXCO in the third quarter of 2021.

  • Coverage Level and Scope Technical Committee: The draft Research Paper on Deposit Insurance Coverage Level and Scope is being reviewed by the SPRA in June 2021. The paper is scheduled to be reviewed by the CPRC in the third quarter of 2021.

  • Financial Technology Technical Committee:

• The first batch of FinTech Briefs – An Introduction (Challenges for Deposit Insurers), Data Standardization, and Machine Learning – were finalised for posting on the IADI members-only Website for comments from all Members by 25 June 2021. Comments will be incorporated before publication on the IADI external website.

• Three e-money briefs – Kenya, UK, and Ghana – are being revised and reviewed by the Technical Committee. A series of FinTech Briefs are currently underway.

• Work Plan FY 2021/22: Approved the MRC Work Plan FY 2021/22 at the MRC meeting held in June 2021. The Work Plan covers key initiatives in FY 2021/22 including the Membership Benefit Survey and the Communication Strategy.

• Membership: Continued to follow up potential members in close cooperation with Regional Committees and the IADI Secretariat.  

• IADI Profile: Profiles of the Association revised. Now available in eight languages (English, Chinese, German, Russian, Spanish, French, Portuguese and Arabic) on the IADI Members and Participants section of the IADI public website.

• Secretariat Report on the Financial Statements for FY 2020/21 and Cash Management Report per 31 March 2021: Review completed and approved at the MRC meeting held in June 2021 and further approved by EXCO.

• IADI Audited Financial Statements for FY 2020/21: Review completed and approved at the MRC Meeting held in June 2021 and further approved by EXCO. Audit process finalised in conjunction with Treasurer, ARCC, IADI Secretariat and PwC (External Auditor).

The TTAC in coordination with the Capacity Building Technical Committee (CBTC) and the Training and Capacity Building Unit (TCBU), reports the following activities:

• Expert Training Strategy is a proposal to develop a structured program for training IADI Members and their staffs in the Core Principles. The Strategy outlines a four-staged process for an IADI Member to gain expertise in the Core Principles and become capable of leading Self-Assessment Technical Assistance Program (SATAP) reviews, supporting Technical Assistance Workshops (TAWs), and supporting or participating in the IMF/World Bank FSAP reviews.

  The Core Principles Practitioners Workshop (first stage of the Strategy) Working Group finalised the materials for the workshop. The materials were approved by CBTC and TTAC. IADI expects to hold the first Practitioners Workshop virtually at the end of 2021.

• Strategy to Encourage More Members to Engage in Self-Assessments has three deliverables: written guidance, a half-day workshop, and an executive briefing presentation. The third and final deliverable, the 30-60 Minute executive briefing presentation was approved by the CBTC and TTAC in March. The presentation is to be used as a marketing pitch that can be presented at EXCO meetings or other IADI events.

• CBTC created a Working Group (WG) with the TCBU, TTAC, Research Unit (RU) and CPRC to develop communication channels with the CPRC for the purpose of identifying issues with the CPs. The WG met in April 2021, and is in the process of creating a Terms of Reference (TOR) to align the goals of all parties involved.

Response to the Covid-19 crisis

The IADI Research Unit (RU) has worked on a number of initiatives in response to recent developments in the global economy relating to Covid-19.

In May 2021, IADI published a Survey Brief on the Impact of the COVID-19 Pandemic on Deposit Insurance. The paper offers key insights acquired through the IADI Follow-up Survey on COVID-19 Implications for Deposit Insurers, conducted in January 2021. This survey sought to gauge the impact of the Covid-19 pandemic crisis on the financial sector and measures taken by regulatory authorities and deposit insurers in response. Detailed survey results are now available to IADI Members.

CP monitoring and compliance assessment

In the area of Core Principle (CP) monitoring and compliance assessment, the Research Unit finalised the development of the CP Monitoring and Compliance Assessment Framework and introduced a thematic assessment programme. The programme is a desk-based and off-site monitoring approach to monitor, collect and analyse information on Members self-assessment of compliance with the CPs. It will complement existing self-assessments, IADI’s SATAP, FSAPs and other means of assessing gaps between existing and desired outcomes.

The Research Unit developed Procedures for Conducting Thematic Assessments of Compliance with the Core Principles and an implementation plan to operationalise the new thematic assessment programme. The two documents were reviewed and approved by the CPRC and EXCO in April 2021.

Following the approval, an invitation for Expression of Interest (EOI) for Assessment Team Members for the Thematic Assessment of Organisational Structure, reviewing CP 1 (Public Policy Objectives), CP 2 (Mandate and Powers), CP 3 (Governance), and CP 11 (Legal Protection) has been circulated to IADI members and an assessment team has been established with balanced regional representation.

The Assessment Team is currently developing a questionnaire for reviewing CP 1, 2, 3 and 11. The aim is to circulate the questionnaire to all the IADI members to respond in September 2021.

Research Initiatives

In June 2021, IADI Policy Note No. 1 – Effective Reimbursement Systems and Processes was published. The Note was prepared by the Research Unit and summarises responses received from IADI Members across 47 jurisdictions to the Survey on Effective Reimbursement Systems and Processes. The paper seeks to identify the gaps between current insured depositor reimbursement practices and the IADI Core Principles for Effective Deposit Insurance Systems (with a focus on CP15: Reimbursing Depositors) and identify current and future challenges faced by deposit insurers.

The Research Unit also published IADI Policy Brief No. 2 – The Geographic Dynamics of Deposit Insurance in May 2021. This Policy Brief investigates the associations between the features of deposit insurance systems and geography. The results highlight considerations for deposit insurance research, training and more targeted technical assistance initiatives. Findings from this paper were presented in the inaugural IADI Insights seminar in May 2021.

In July 2021, IADI Policy Brief No. 3 – Banking Resolution – Expansion of the Resolution Toolkit and the Changing Role of Deposit Insurers was made available to IADI Members. It provides evidence, both qualitative and quantitative, demonstrating that the resolution toolkit for deposit insurers has expanded considerably since the 2008 Global Financial Crisis.

The Research Unit has also collaborated with the IADI Financial Technology Technical Committee in preparing IADI Fintech Brief No. 3 – Machine Learning Methods and the Potential for Deposit Insurance. This paper suggests that deposit insurers are yet to fully realise the potential of machine learning, and the substantial benefits that it may present to their operational and policy-oriented activities.

Two additional papers are due to be published in 2021. These are IADI Policy Briefs on ‘Emerging Trends in Deposit Insurance’ and ‘Climate Change in Deposit Insurance’.

Other research and policy initiatives in progress by the Research Unit include a draft paper on digital stored value products (developed jointly with the Alliance for Financial Inclusion). There has also been considerable engagement with the CPRC and Islamic Financial Services Board on developing IADI Core Principles for Islamic Deposit Insurance Systems (CPIDIS). The CPIDIS was published in July 2021.

New Podcast Series

The Secretariat Research Unit has initiated an IADI Podcast series, using a new channel for disseminating and communicating IADI’s research as well as other output of interest to the deposit insurance community. The first podcast was issued on 19 July 2021 and hosts Rishanthi Pattiarachchi from CDIC Canada and covers the recent RCNA Regional Research Paper on Contingency Plan Testing in North America. The podcast is now available at the IADI Website. Further episodes will follow on a regular basis.

2021 IADI Research Conference

IADI hosted its 6th Biennial Research Conference from 10 – 12 May 2021 at the Bank for International Settlements (BIS) in Basel, Switzerland. The conference was attended by 450 participants representing a global audience of around 100 jurisdictions, a new record for the conference.

The conference focused on the theme of “Navigating the New Normal for Financial Stability, Deposit Insurance and Bank Resolution” featuring six invited papers chosen from 45 submissions received in response to a Call for Papers. Each paper was presented by the author and discussed by a reviewer. This research conference was the first to be held virtually by IADI due to the Covid-19 pandemic.

Conference resources including research papers, panel presentations and conference proceedings are now available to IADI Members.

2021 IADI Annual Survey

The 2021 Annual Survey went live in early July 2021. All IADI Members, Associates, Partners and stakeholders are encouraged to participate in this important exercise. The IADI Annual Survey forms the most comprehensive source of deposit insurance information globally, and is utilised extensively for research initiatives and policy decision making. We extend our appreciation to IADI Members, Associates and Partners for their continued support to the IADI data and research initiatives. Results are expected to be published in November 2021.

Survey results from the 2020 Annual Survey showed that jurisdictions continue to strengthen their deposit insurance systems and are moving towards greater compliance with the IADI Core Principles for Effective Deposit Insurance Systems.

To find the details, please see the 15 Key features (available on the IADI public website), full data (eBIS sign-in is required), and the press release.

2021 IADI Chart Pack

The second IADI Chart Pack was published earlier in 2021. This product offers an updated snapshot of key characteristics of deposit insurance systems from around the world.

The IADI Chart Pack is arranged into four themes focusing on deposit insurer structure, coverage and funding, reimbursement and resolution activities, public awareness and financial inclusion.

The full IADI Chart Pack is available on IADI’s website, including French and Spanish translations. Any queries regarding the IADI Chart Pack and deposit insurance database can be addressed to Ryan Defina of the IADI Research Unit.

Call for Paper Proposals

The IADI circulated a call for proposals for external research and policy papers in December 2020 and the application period is now closed. Three paper proposals have been accepted. This provides an opportunity for academics and policy makers to submit their research proposals for topics relevant to deposit insurance and financial stability. Selected proposals will receive funding and support from IADI.

• IADI Policy Brief No. 2 – "The Geographic Dynamics of Deposit Insurance", May 2021

• IADI Policy Note - "Effective Reimbursement Systems and Processes", June 2021

• Financial Stability Institute, Occasional Paper No 17, Fintech regulation: how to achieve a level playing field, February 2021

• World Bank, Technical  Note, The Next Wave of Suptech Innovation: Suptech Solutions for Market Conduct Supervision, March 2021

• World Bank, Policy Research Paper, Consumer Risks in Fintech - New Manifestations of Consumer Risks and Emerging Regulatory Approaches, April 2021

• Alliance for Financial Inclusion, Innovative Regulatory Approaches Toolkit, April 2021

• CGAP, Technical Note, Regulatory Approaches to the Interest Earned on E-Money Float Accounts, May 2021

• Financial Stability Institute, FSI Insights No 32, Institutional arrangements for bank resolution, May 2021