| Background
The IADI, formed on 6 May 2002, is a non-profit organization constituted under Swiss Law, based at the Bank for International Settlements (BIS) in Basel, Switzerland. The IADI’s creation has its roots in the work carried out between 1999 and 2001 by the Study Group (later to become the Working Group) on Deposit Insurance of the Financial Stability Forum (FSF).
Objective
The IADI’s objectives are to contribute to the stability of financial systems by promoting international cooperation in the field of deposit insurance and to encourage wide international contact among deposit insurers and other interested parties.
As of march 2010, there are 60 members of the IADI.
Governing Bodies of the Association
The governing bodies of the Association are the General Meeting of Members and the Executive Council.
The General Meeting of Members is the supreme authority of the Association and the Executive Council acts on all matters to ensure the sound functioning of IADI’s business and afairs.
IPAB’s Participation in the IADI
IPAB is a founding member of the IADI. The Institute participates in the Executive Council and in the following Standing Committees: Research and Guidance, Governance, and Membership and Communications.
Core Principles for Effective Deposit Insurance Systems
On April 7, 2008, the Financial Stability Forum published its Report on Enhancing Market and Institutional Resilience. One of the highlighted facts was that some events during the recent financial turmoil brought into perspective the importance of having effective procedures to reimburse depositors; and that particular fact stressed the need to reach agreements among authorities over a set of international principles for effective deposit insurance systems.
On July, 2008, the Basel Committee on Banking Supervision (BCBS) and the International Association of Deposit Insurers (IADI), decided to collaborate to develop an internationally agreed set of Core Principles, using the IADI’s Core Principles for Effective Deposit Insurance Systems as a basis. A joint working group was established --incorporating representatives from the BCBS’ Cross-border Bank Resolution Group (CBRG) and IADI’s Guidance Group (in which IPAB takes part)-- to develop the Core Principles. Once finished, these Principles were submitted to the BCBS and IADI for their respective review and approval.
The Core Principles have been 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.
On March 12, 2009 the BCBS and IADI released the Core Principles for public consultation. The comment period ended on May 15. The public comments were largely supportive of the proposed Core Principles and no further changes were made.
On June 18, 2009 the final version of the Core Principles was released. When presenting the document, Martin Gruenberg, IADI’s President and Executive Council Chairman, noted that
“The Core Principles issued today respond to one of the lessons of the financial crisis: the need for effective deposit insurance guidelines to help maintain public confidence. They set an important benchmark for countries to use in establishing or reforming deposit insurance systems.”
Finally, in June 2009 the Core Principles for Effective Deposit Insurance Systems were presented before the Financial Stability Board (FSB, formerly the Financial Stability Forum or FSF) during its inaugural meeting held on June 26-27, 2009; where a motion was submitted to have these Principles incorporated to the FSB Standard Compendium. Work is underway between IADI and the International Monetary Fund and World Bank to develop an assessment methodology for these Core Principles.
The IPAB has also participated in several subcommittees whose purpose is to draft and prepare research documents on diverse matters. To date, the IPAB participates in the following IADI research subcommittees:
- Payout Process *
- Differential Premium System *
- IADI Core Principles for Effective Deposit Insurance Systems Methodology *
- Ad Hoc Group for Technical Assistance *
- Evaluation of the Effectiveness of Deposit Insurance Systems *
- Early Intervention and Prompt Corrective Actions *
- Public Policy Objectives *
- Transitioning **
In addition, the IPAB has participated in the research projects of the following subcommittees: Mandates, Organizational Risk Management, Evaluation of DIF Sufficiency, and Coverage. The research projects drafted by these subcommittees are all in the final stages of their preparation and publication.
Finally, the document on Establishment of a Legal Protection Scheme for Deposit Insurance Systems - developed by a working group chaired by the IPAB – was published in February 2010.
(*) Participation by the IPAB.
(**) Chaired by the IPAB.
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