Basel issues principles for deposit insurance

MANILA, Philippines – The Basel Committee on Banking Supervision and the International Association of Deposit Insurers (IADI) has issued last month the Core Principles for Effective Deposit Insurance Systems. The core principles, which were developed by a joint working group between the Basel Committee and IADI, address a range of issues including deposit insurance coverage, funding and prompt reimbursement.

They also focus on issues related to public awareness, resolution of failed institutions and cooperation with other safety net participants, including central banks and supervisors.

Events during the recent international financial turmoil illustrate the importance of effective depositor compensation arrangements and the need for authorities to agree on an international set of principles for effective deposit insurance systems.