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31 January 2011

New Core Principles for effective deposit insurance systems issued


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A joint committee of the the Basel Committee on Banking Supervision's (BCBS) Cross Border Resolution Group (CBRG) and the International Association of Deposit Insurers (IADI) have collaboratively issued new principles for effective deposit insurance.


A set of 18 core principles have been created by the BCBS and IADI, aimed at supporting the efficacy of deposit Insurance Systems around the world.

The Core Principles are reflective of, and designed to be adaptable to, a broad range of
country circumstances, settings and structures. The Core Principles are intended as a
voluntary framework for effective deposit insurance practices. National authorities are free to put in place supplementary measures that they deem necessary to achieve effective deposit insurance in their jurisdictions. The Core Principles are not designed to cover all the needs and circumstances of every deposit insurance system or prescribe a single specific form of deposit insurance. Instead, specific country circumstances should be considered in the context of existing laws and powers to fulfil the public policy objectives and mandate of the deposit insurance system.  

An assessment of a country’s compliance with the Core Principles can be a useful tool for countries that are implementing, reviewing or actively reforming a deposit insurance system. A comprehensive, credible and action-oriented assessment should focus on the deposit insurance system and its relationship to the safety-net functions which support it. The assessment of the broader safety-net functions (i.e. preconditions) is mostly outside the jurisdiction of the deposit insurer. However, it can have a direct effect on the deposit insurer’s ability to fulfil its mandate. The assessment of a deposit insurance system should identify strengths and weaknesses in the existing deposit insurance system and form a basis for remedial measures by deposit insurers and policymakers (e.g. government authorities or if it is primarily a private system, its member banks) after taking into account the structural, institutional and legal features of each national deposit insurance system. The review of the broader safety net will need to rely on external reports – including, for example, those resulting from recent Financial Sector Assessment Program (FSAP) efforts – or include assessment teams members with the necessary experience and skills. If no such reports are available, then the assessment should indicate that there is insufficient information available for a complete review of preconditions.

These principles are the outcome of the responses to an earlier consultative document completed and endorsed by the international community in 2009.



© BIS - Bank for International Settlements

Documents associated with this article

Core Dep.pdf


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