It is essential, in the interests of financial stability, that these robust insurance frameworks are built sufficiently in advance during economic good times, given that it is often too late to improvise once the problems occur.
The crisis has shown that deposit insurance issues matter a lot for financial stability. It is essential to have properly functioning deposit insurance schemes in place when financial stress emerges. And it is essential that these robust insurance frameworks are built sufficiently in advance during economic good times, given that it is often too late to improvise once the problems occur.
From this perspective, the recent completion of deposit insurance core principles is welcome and represents a great achievement on the part of the International Association of Deposit Insurers and the Basel Committee on Banking Supervision. It is one key element of the massive and broad work programme undertaken by the official sector in response to the crisis. But implementation is crucial: the development of prudent, well informed standards and supervisory guidance is only the first stage in a two-step process. The second critical step is for these standards and guidance to be implemented in an internationally coordinated and consistent manner. This puts a premium on cooperation and information-sharing among supervisors.
© BIS - Bank for International Settlements
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