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Core Principles on Mandates and Powers

Core Principles on Mandates and Powers. Yvonne Fan Acting Director Central Deposit Insurance Corporation. 23 September, 2009. Design of a DIS. Process of developing an effective DIS. Public Policy Objectives. Mandates & Powers. Strategic Plan for DIs. STEP1. STEP 2. STEP 3.

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Core Principles on Mandates and Powers

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  1. Core Principles on Mandates and Powers Yvonne Fan Acting Director Central Deposit Insurance Corporation 23 September, 2009

  2. Design of a DIS Process of developing an effective DIS Public Policy Objectives Mandates & Powers Strategic Plan for DIs STEP1 STEP 2 STEP 3 Implementation STEP 4 Ongoing Evaluation and Validation STEP 5 2

  3. Contents • Core Principles on Mandates and Powers • Supporting Guidance • Convergence in Deposit Insurance Practices • Conclusion 3

  4. Clear Formal Statement Core Principle for Effective DIS Mandate: It is critical that the mandate selected for a deposit insurer be clear and formally specified and that there be consistency between the stated public policy objectives and the powers and responsibilities given to the deposit insurer. 4

  5. Core Principle for Effective DIS cont. Powers: A deposit insurer should have all powers necessary to fulfill its mandate and these powers should be formally specified. All deposit insurers require the power to finance reimbursements, enter into contracts, set internal operating budgets and procedures, and access timely and accurate information to ensure that they can meet their obligations to depositors promptly. 5

  6. Core Principles Supporting Guidance No “one size fits all” mandates Direct access to depositors’ information & verification Adequate funding & liquidity Operational independence 6

  7. Internal Elements • Funding - No money, no talks • Human resource - A company’s best assets • IT - It’s a whole new world 7

  8. External Elements • DI is one major pillar of FSN - Better equal footing • Clear division of labor - Good fences make good neighbors • No non-productive duplication - Everybody’s business is nobody’s business • Close cooperation & information sharing - Union is strength External elements External elements 8

  9. DI Powers Non-Paybox Risk Manager Given powers Paybox Access to deposit information Adequate funding Entering into contract Setting internal budgets & procedures Intervention powers Membership entry & exit control Risk management Examinations Financial assistance 9

  10. Convergence in DI Practices • Areas of convergence in DI • Public policy objectives • Reimbursement depositors QUICKLY (review of depositor reimbursement practice) 10

  11. Non-payboxes A Trend after the Crisis 11

  12. Convergence in DI Mandates and Powerscont. • Areas with potential for convergence • Mandates & powers • Adding more powers & responsibilities to payboxes • Greater authorities in bank examination, risk assessments and interventions, and bank resolution 12

  13. Convergence in DI Mandates and Powerscont. • Funding • Ex-ante funding • Charge premium to build up DIF • Authority to charge levies or other charges • Access to contingency funding sources for liquidity purposes 13

  14. Conclusion • Mandates & powers must align • More powers are needed to fulfill DI’s mandates 14

  15. Thank You ! www.iadi.org www.cdic.gov.tw

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