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Ms. G. G. Garcia
The paper surveys the characteristics of explicit systems of deposit insurance in 68 countries. It compares these actual practices with a set of best practices that has been adopted by IMF staff for their advice to member countries. These best practices seek to establish a system of deposit insurance that provides incentives for all parties—whether they are directly or indirectly affected by the guarantee—to keep the financial system sound. The paper discerns some convergence toward best practices in recent years, but notes several areas where improvements in the incentive structure are still necessary.
Ms. G. G. Garcia

weakest banks remain in the system. Such a system is unlikely to remain solvent. In short, a poorly designed DIS can cause a deterioration in the condition of the banking system. Agency problems occur whenever an employee or a contractor, acting as an agent for the principal that he/she represents, pursues his own interests rather than those of his employer. A DIS can encounter agency problems in its relationships both with the government and the industry it oversees. They can occur when members of DIS staff place their own career advancement above the interests of

International Monetary Fund. Monetary and Capital Markets Department

. 42 The Bill also provides that DIS staff could be seconded to the BoM. 43 A mandate in which the Deposit Insurer has additional responsibilities, such as certain resolution functions (e.g., financial support). 44 Preliminary analysis suggested a level of coverage of Rs 300,000, roughly equivalent to US$8,500 or 90 percent of per capita GDP. 46 See TA report “Bank and Insurance Resolution, and Deposit Insurance,” D. Parker (MCM), May 2016. 47 At present, there are only two deputy governors. If that arrangement is retained

Ms. G. G. Garcia

law should also require that DIS staff obey the same rules as supervisors regarding the confidentiality of information. Information to be disseminated Supervisors will want to disseminate as much of their information as is competitively equitable to enable the public to protect its financial interests and help to keep the banking system sound through market discipline. Accurate information will also help to avoid unnecessary runs against sound banks. The supervisor must also make arrangements to share a larger portion of its bank-by-bank data with the DIS so

Ms. G. G. Garcia
A well-designed deposit insurance system (DIS) will provide incentives for citizens to keep the financial system sound. However, a poorly designed DIS can foster a financial crisis. This paper, therefore, makes recommendations for creating and running a limited, incentive-compatible, DIS. The paper also examines factors in the decision to grant, temporarily, a comprehensive guarantee, and the design of that guarantee, should a systemic financial crisis nevertheless occur. It concludes with guidance on the removal of that guarantee.
International Monetary Fund. Monetary and Capital Markets Department
This Technical Assistance Report discusses measures needed to strengthen bank resolution and crisis management framework in Mauritius. The current legal framework in Mauritius does not provide the supervisor with adequate triggers and powers to mitigate risks at a sufficiently early stage. The law should provide for a broader range of corrective tools that allow the supervisor to restore weak banks to sound financial conditions. A new resolution framework is needed to effectively manage failing banks, safeguard financial stability as well as limit moral hazard. Formal plans describing how the resolution authority will manage the failure of individual banks and their groups need to be developed.