Title: Bank Deposit Guarantee Systems
Subtitle: A Comparative Study within the G-20
Subject Classification:  Economics and Finance, Politics and Government, Law and Legal Ethics  
BIC Classification: KC, JP, LA
BISAC Classification: BUS004000, BUS027000, LAW008000
Binding: Hardback, eBook
Publication date: 20 Mar 2025
ISBN (Hardback): 978-1-83711-181-7
ISBN (eBook): 978-1-83711-182-4

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Description

According to The International Association of Deposit Insurers (IADI) report in 2024, more than 146 countries/ jurisdictions have adopted deposit insurance systems to protect their banking systems. Deposit insurance has different regulations across countries, ranging from full to partial coverage, from explicit to implicit appliance, from being compulsory to non-compulsory. Deposit insurance may also differ in terms of premium implementation. The most predominant argument in favor of deposit insurance systems arises from their ability to prevent bank runs, which usually lead to asset liquidation and potentially to bank failure. By preventing losses for individual depositors, their incentive to withdraw deposits before other depositors do so is limited if a DIS is in place.

To properly design a safety net, countries need to balance two competing goals: ensuring stability in the financial system when liquidity and solvency problems arise while minimizing moral hazard. Deposit insurance is one element of the financial safety net that exists in many countries, particularly developed countries. The safety net aims to maintain the stability of the financial system by protecting the critical financial intermediation function of banks and their role in the national payments system. Deposit insurance helps ensure depositors’ confidence in the financial system.

Biography

Author(s):  Dr. Felix Lessambo is an Associate Adjunct Professor at Fordham University, New York, USA.

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