Deposit Insurance Systems
A sound, competitive banking system is important to a nation's economic vitality. Banks provide critical services through their role in the payments system, in the intermediation of funds from savers to consumers and investors, and in the transmission of monetary policy. A key element in maintaining confidence in the banking system and promoting financial stability is deposit insurance. The number of jurisdictions either establishing or considering establishing a deposit insurance system has expanded rapidly in recent years.
As of 31 January 2014, 113 jurisdictions have instituted some form of explicit deposit insurance up from 12 in 1974. Another 40 jurisdictions are studying or considering the implementation of an explicit deposit insurance system. In establishing a deposit insurance system, each jurisdiction must consider what it hopes to achieve and whether the system that is established is internally consistent with its goal(s). Circumstances unique to the jurisdiction will have a significant bearing on what a deposit insurance system can achieve and how the system should be structured.
Facts & Features
The purpose of deposit insurance varies, but typically involves promoting financial stability and protecting small savers from loss in the case of a troubled or failing bank. Deposit insurance can enhance financial stability by removing the incentive for bank runs to develop. The explicit rules of a deposit insurance system provide transparency and added certainty regarding the resolution process for failed banks. The following tables provide a summary overview of the key aspects of deposit insurance organizations around the world.
Deposit Insurance Systems Governing Statutes
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