WOCCU Supported Measures Included in IADI Guidance Paper on Deposit Insurance Systems

The International Association of Deposit Insurers (IADI) released a Guidance Paper entitled, "Public Policy Objectives for Deposit Insurance Systems". The Guidance Paper gives an update on deposit insurance system public policy objectives in various jurisdictions as well as guidance for effective implementation of Principle 1 found in the IADI’s Core Principles for Effective Deposit Insurance Systems, which lays out essential public policy directives aimed to “protect depositors and contribute to financial stability”. The paper includes “results of a survey conducted by IADI of members’ experiences in selecting, implementing and evaluating their PPOs”.

In October, WOCCU responded to the IADIs consultation on public policy objectives for deposit insurance systems and emphasized its support for IADI’s PPOs to protect depositors and support financial stability; however, we encouraged IADI to include proportionality guidance so that national level regulators have the clearance to properly tailor regulations for cooperative institutions that are often less complex and less risky than their for-profit bank counterparts. With success, IADI addressed the importance of proportionality and stated, “By setting only the minimum requirement, these guidance points are supportive of the principle of proportionality. In any case, their application is voluntary and deposit insurers are free to put in place their own PPO development process and review framework based on jurisdiction, circumstance and legal framework.”

Additionally, WOCCU urged IADI to create effective regulation that provides supervision and monitoring of depository institutions for credit unions, as well as the provision of technical and financial assistance programs that will contribute to the protection of deposits for cooperative depositories and smaller, less capitalized institutions. WOCCU noted an absence of data for deposit insurance systems designed for credit unions. In the survey, IADI listed the countries that had PPOs in place as of March 31, 2016, and of those countries, Poland was the only country found to ensure financial assistance for credit unions, however, many countries address small, less sophisticated depositors.