Core Principles for Effective Deposit Insurance Systems
On 18 June 2009, the Basel Committee on Banking Supervision (BCBS) and the International Association of Deposit Insurers (IADI) published Core Principles for Effective Deposit Insurance Systems, setting an important benchmark for jurisdictions to use in establishing or reforming deposit insurance systems. The Core Principles were designed to be adaptable to a broad range of jurisdiction circumstances to take into account the broader characteristics of safety net arrangements and address a comprehensive range of issues including coverage, funding, powers, membership, transitioning from blanket to limited coverage and prompt reimbursement.
Although the original Core Principles have served their purpose well, lessons learnt from the recent financial global crisis and developments in the regulatory landscape have shown that revision would maintain their use as a flexible, internationally applicable standard. As a result, IADI established a Steering Committee in February 2013 to undertake the revision. The Committee’s recommendations were submitted to a Joint Working Group (JWG) comprised of representatives from the Basel Committee on Banking Supervision (BCBS), European Commission (EC), European Forum of Deposit Insurers (EFDI), FSB, IMF, World Bank and IADI. The revision process culminated on 21 October 2014, when IADI’s Executive Council formally approved the revised set of Core Principles for submission to the Financial Stability Board (FSB). IADI Core Principles have been included into the FSB’s Key Standards for Sound Financial Systems. These 15 standards have been designated by the FSB as key for sound financial systems and deserving of priority implementation depending on country circumstances. The standards are broadly accepted as representing minimum requirements for good practice that countries are encouraged to meet or exceed.
The revised Core Principles strengthen the deposit insurance standards in several areas including reimbursement speed, coverage, funding and governance, adding more guidance on the deposit insurer’s role in crisis preparedness and management. The updated document also reflects the greater role played by many deposit insurers in resolution regimes while continuing to accommodate a diverse range of deposit insurance systems.
Translations of the Core Principles for Effective Deposit Insurance Systems
The other language versions will be available soon.
- Core Principles for Effective Deposit Insurance Systems - A methodology for compliance assessment (December 2010)
- BCBS/IADI Press Release (Arabic version, Chinese version, French version, Portuguese version, Russian version, Spanish version)
- Core Principles for Effective Deposit Insurance Systems (final version June 2009)
- Consultative Version Released in March, 2009
Guidance for Assessing Compliance with the IADI Core Principles
- Handbook for the Assessment of Compliance with the Core Principles for Effective Deposit Insurance Systems - 14 March 2016
The Handbook is designed to provide additional guidance for assessing a jurisdiction’s compliance with the Core Principles.
Related Research and Resources
- IADI Endorsed Guidance from Third Parties
- Financial Stability Forum (FSF) Working Group on Deposit Insurance, Guidance for Developing Effective Deposit Insurance Systems: Final Report of the Working Group on Deposit Insurance, Basel, 2001.
- Key Conclusions of the APEC Policy Dialogue on Deposit Insurance and IADI Guidance Points,Basel,2005b.
- Report of the Financial Stability Forum - Enhancing Market and Institutional Resilience, 7 April 2008.
In an April 2008 report on Enhancing Market and Institutional Resilience, FSF called on authorities to agree on an international set of core principles for effective deposit insurance systems (April 2008). The FSF report was developed in response to a request from the G7 ministers to undertake and analysis of causes and weaknesses that produced the financial turmoil in global markets beginning in 2007.
- Core Principles for Effective Banking Supervision from the Basel Committee on Banking Supervision
The Basel Committee on Banking Supervision Core Principles for Effective Banking Supervision provide an international benchmark for assessing the quality of national supervisory systems. The Basel Core Principles acknowledge that a carefully designed system of deposit insurance can contribute to public confidence in the banking system.