FDIC Issues Speech to International Association of Deposit Insurers
Introduction
Good evening. I am deeply honored to be invited to speak to you this evening. I would like to begin by thanking
The IADI Annual General Meeting and Conference is an important event that provides a venue for members, partners, and the entire community of financial regulators to exchange information on deposit insurance. I am delighted to see all of the delegates from our member organizations, as well as representatives from central banks, bank supervisory agencies, and other domestic and international organizations in attendance today.
Historical Perspective
As you may know, this conference coincides with the 50th anniversary of the establishment of the
Indeed,
Between the 1880s and the early 1930s, the
The next country to create a national deposit insurance system was
As mentioned, the CDIC then was established in 1967, and the
A major boost to the development of deposit insurance came with the
In
Globally, more than 100 countries today either have, or are considering, deposit insurance schemes, with most being contemplated during "normal" times, but not implemented until times of crisis.
The Establishment of IADI
Given the global nature of financial risk, the importance of sharing experiences and expertise among these deposit insurance systems became apparent. The idea to launch an international association first gained prominence at a conference hosted by the
One of J.P.'s lasting contributions during 2006 and 2007 was to lead the
I was privileged to succeed J.P. as President of IADI in 2007 and served as Chairman of the
Developing the Core Principles
As the value of effective systems of national deposit insurance became more apparent in the aftermath of the crisis, the need for international standards to provide guidance to countries in developing such systems gained recognition. This was acknowledged by the Financial Stability Board (FSB) which recommended in its
At the time, although there were international standards for banking supervision and the regulation of securities and insurance, there were no comparable guidelines or best practices for deposit insurance systems. The FSB cited a need for standards that would provide for effective deposit insurance systems, while accommodating the unique circumstances of countries at different stages of economic and financial development that operate under different institutional frameworks.
IADI had already been working on the development of core principles for some time and was well positioned to respond to the FSB's call for international standards. The association formed a joint working group consisting of deposit insurers from IADI, bank supervisors from the
Once the Core Principles were established, IADI saw the importance of developing a corresponding methodology to provide additional guidance for assessing a jurisdiction's compliance with the principles. This significant milestone was achieved in
IADI reached another major milestone with its recognition as an international standard setter in early 2011, when the FSB approved a revision of its Compendium of Standards to include the Core Principles among its Key Standards for Sound Financial Systems.
The Value of the Core Principles and IADI
The Core Principles serve as a valuable benchmark for jurisdictions to develop new systems of deposit insurance and reform existing deposit insurance systems. The principles are comprehensive, addressing such issues as coverage, funding, powers, membership, cross-border cooperation, transitioning from blanket to limited coverage, early detection and timely intervention, reimbursement of depositors, and recoveries on assets of failed institutions. The principles can be adapted to a broad range of circumstances.
In 2014, the Core Principles were revised to reflect lessons learned from the global financial crisis, as well as experiences with compliance assessments conducted through the FSB Peer Review process. Some noted enhancements to the Core Principles include:
* Expanded guidance on reimbursements, public awareness, coverage, and funding;
* New guidance on deposit insurers' role in crisis preparedness and management; and
* Standards addressing cross-border deposit insurance issues.
IADI also published an updated Handbook for the Assessment of Compliance with the Core Principles to reflect the 2014 revisions.4 The handbook is designed as a "how-to" guide, providing additional guidance on assessing a jurisdiction's compliance with the Core Principles, and includes lessons learned from collaboration with
Through the development of standards, and by bringing together deposit insurers from around the world, IADI has gained worldwide recognition as the primary source of quality training, research, conferences (such as this), and educational programs in areas related to deposit insurance, crisis management, and resolution. Since 2009, IADI has developed and delivered more than 40 training programs and workshops specifically designed to promote compliance with the Core Principles.
IADI has also partnered with other international organizations including the
The Core Principles and related efforts to support compliance have contributed to stronger deposit insurance systems around the world. And these effects extend beyond the systems of our individual members. To cite just two examples, when
If we step back and consider these developments, it's certainly clear that IADI has achieved a great deal in a relatively short period of time. Within 10 years of its establishment, the association became recognized as the standard-setting body for deposit insurance by all the major public international financial institutions, including the FSB, BCBS,
IADI has also expanded significantly along the way, growing from 25 members in 2002 to 83 members, nine associates, and 14 partners in 2017. It is truly a global association and an important source of strength and credibility in its role as standard setter for the world's deposit insurance systems.
Current and Future Initiatives
While a lot has been achieved, there is still much work to do. I have followed with interest IADI's recent review of its operations. The goal of this review was to more fully integrate IADI's operations with its growing membership and new responsibilities as a standard-setting body. In response, the
* Promoting deposit insurance compliance with the Core Principles for Effective Deposit Insurance Systems;
* Advancing deposit insurance research and policy development; and
* Providing members with technical support to modernize and upgrade their systems.
These goals are both timely and relevant, and the association has made significant progress in achieving them.
I should note that these goals had their genesis in the strategic roadmap that was developed under the leadership of former IADI President
IADI's strategic goals are being addressed through current activities and initiatives planned over the course of the next several years, and implementation is to be completed in two phases. Phase I has been underway for some time and I'm told will soon be nearing completion. As part of the work being undertaken in Phase I, the
I am particularly pleased to see this strengthening of the secretariat in the areas of research and policy analysis. In order for IADI to fulfill its role as global standard setter, the secretariat must have sufficient capacity to manage the output by the association in all three of its key strategic areas of Core Principles: compliance, research, and technical assistance.
IADI has also made important enhancements to its programs for training and technical assistance, including the
I encourage you to stay the course as you continue to execute the training and technical assistance components of the strategic plan, and find a way to add sufficient capacity in the secretariat to manage and sustain these important efforts.
I have great appreciation for the strong leadership and hard work that is required both to develop such ambitious plans and then put them into action with fundamental changes to organizational structure and operations. The association certainly owes a great debt of gratitude to its current President,
While there is still much work to do, when I look back at how far we have come since 2002, the progress is impressive. It should be very gratifying to all of us - and I thank you for your hard work and dedication to IADI. I believe the outlook is bright for our association. The years ahead promise to be pivotal ones and I wish you great success as you move on to the next phase of your strategic initiatives to ensure financial stability through effective deposit insurance systems.
Thank you.
1 The FSB's Report of the
2 Core Principles for Effective Deposit Insurance Systems is available at http://www.iadi.org/en/core-principles-and-research/core-principles.
3 Core Principles for Effective Deposit Insurance Systems - A methodology for compliance assessment is available at http://www.bis.org/publ/bcbs192.pdf.
4 The Handbook for the Assessment of Compliance with the Core Principles is available at http://www.iadi.org/en/assets/File/Core%20Principles/IADI_CP_Assessment_Handbook_FINAL_14May2016.pdf.
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