Safeguarding Deposits: Learning from Experience

This book addresses some of the issues involved in ensuring that the savings deposits of the public are secure. It:

• Highlights the key roles played by:
  • An appropriate regulatory environment;
  • Depositor education;
  • Sound management of financial intermediaries.
• Outlines the points for and against risk management mechanisms such as deposit insurance;
• Lists the rehabilitation measures to be taken following a bank crisis;
• Deals with the safeguarding of the nominal value of savings.

The book presents evidence on different aspects of banking instability in various countries, measures to rehabilitate ailing financial institutions and the safety of deposits in times of financial crisis. The book covers:

• Bank rehabilitation techniques and deposit insurance schemes;
• Methods and systems that are relevant for preventing financial institution instability in developing countries;
• The strengths and weaknesses of the informal sector from the point of view of the depositor;
• Key policies in preventing instability in financial institutions, with the principal elements of the safety net and with methods to protect the safety of savings when financial institutions become insolvent;
• Presents case studies of crises from three European countries - Finland, Italy and Hungary and from the semi-formal sector in Malaysia and Kenya.

The book concludes that the most important factor in safeguarding savings deposits in developing countries is the quality and character of management within the banks themselves, and not for instance, the availability or otherwise of deposit insurance.