Search Results

You are looking at 1 - 4 of 4 items for :

  • "operated Dis" x
Clear All
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

they hope to be subsidized by a government, appears to be a reality in more than half of the DIS surveyed. Table 7 shows that 5 of the 13 privately run DIS and 19 of the 23 jointly run systems have financial backing from the government. On the other hand, 8 privately run schemes and 5 jointly operated DIS have attempted to avoid this particular agency problem by refraining from providing government financial support. In some cases, the law is silent on the subject of funding; in others, government financial backing is explicitly foresworn. However, whether those

Ms. G. G. Garcia

illiquid, but not insolvent, in 1991 when faced by a large number of bank failures. 41 Ex post assessments tend to be chosen by privately financed and privately operated DIS. 42 Failure of a country’s largest banks would be a systemic failure, as discussed in Section IX . 43 See for example, Enoch, Garcia, and Sundararajan, (1999) . 44 Table 2 shows that premiums range from 0.0 to 2.0 percent of deposits. Venezuela raised its premium to 2.0 percent when the DIS was already insolvent. 45 For country practices in this regard see Garcia

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.