Strengthening Financial Stability in Southeast Europe and Eurasia: USAID’s Partners for Financial Stability Cooperates with International Standards Setting Body and European Authorities to Improve Deposit Insurance Systems
The recent global financial crisis highlighted the importance of deposit insurance in maintaining economic and financial stability. Countries around the world increased their deposit insurance coverage during the crisis in order to maintain public confidence in banks. While most countries have deposit insurance systems, the basic structure of deposit insurance programs varies widely from country to country – for instance, the level of insured deposits, financing of the deposit insurance systems, the handling of failed banks, etc.
In 2009, a set of international standards for deposit insurers was adopted by the International Association of Deposit Insurers (IADI) and the Financial Stability Board. These standards, called Core Principles for an Effective Deposit Insurance System, establish basic, uniform standards that all deposit insurers should fulfill. The deposit insurance Core Principles represent a step forward in the overall international financial stability framework.
Together with IADI and the European Forum of Deposit Insurers (EFDI), USAID is supporting a ground-breaking effort to implement the new deposit insurance Core Principles in the emerging countries in Southeast Europe (SEE) and Eurasia. USAID’s Partners for Financial Stability Program co-sponsored a regional workshop for deposit insurance officials from Southeast Europe (SEE) and Eurasia in Tirana, Albania, July 6-8 2011, hosted by the Albanian Deposit Insurance Agency, IADI, and EFDI. At the workshop, deposit insurance officials from 15 countries learned how to assess their own compliance with the new Core Principles, using Albania’s deposit insurance system as a practical case study.
Building on the workshop in Albania, PFS will provide additional training and assistance to SEE and Eurasia deposit insurers. PFS will assist the target countries to conduct assessments of their Core Principles compliance and to implement measures to address weaknesses. The expected outcome of these efforts is a more stable financial sector and more sustainable economic growth in Southeast Europe and Eurasia.