Since its establishment in 2002, IADI has been committed to sharing deposit insurance information and experiences with the international community. The mission of IADI is to contribute to the enhancement of deposit insurance effectiveness by promoting guidance and international cooperation . As part of its mission, IADI undertakes research projects to provide guidance on deposit insurance issues.
In order to deal in a timely and effective manner with the impact of individual bank failures or systemic banking crisis, many countries are seeking to enhance their mechanisms for dealing with failing or failed banks. Establishing an appropriate resolution framework and clarifying the roles and responsibilities of the financial safety-net participants within it are central issues and are highly dependent on a countrys political, cultural, financial, economic, legal and supervisory circumstances.
The responsibilities of deposit insurers for various aspects of the resolution framework are also country-specific and reflect national public policy objectives and mandates. However, regardless of the specific responsibilities of the deposit insurer, the manner in which failed banks are resolved is of crucial importance for all deposit insurers and other financial safety net participants.
The objective of this paper is to develop general guidance for deposit insurers and other safety net participants interested in establishing or enhancing their mechanisms for dealing with bank failures. It was prepared by the IADI Sub-committee on Developing Guidance for the Resolution of Bank Failures and is designed to take into account different country circumstances, settings and structures.
The paper is based on the judgment of IADIs members and the experiences of various countries involved in the resolution of bank failures. Key sources of information used in the paper were the responses from a survey questionnaire distributed by the sub-committee in June 2004. The paper also draws on relevant reports and other literature available on the subject.
Contents
I. Executive Summary
II. Introduction
III. Resolution of Failed Banks: Issues and Survey
Results
IV. Guidance for the Resolution of Failed Banks.
References
Appendix 1: Net resolution cost in past ten years
Appendix 2: Number of Countries Responding to Questionnaire
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