Deposit Insurance and Crisis Management

Author/Editor:

G. G. Garcia

Publication Date:

March 1, 2000

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

A well-designed deposit insurance system (DIS) will provide incentives for citizens to keep the financial system sound. However, a poorly designed DIS can foster a financial crisis. This paper, therefore, makes recommendations for creating and running a limited, incentive-compatible, DIS. The paper also examines factors in the decision to grant, temporarily, a comprehensive guarantee, and the design of that guarantee, should a systemic financial crisis nevertheless occur. It concludes with guidance on the removal of that guarantee.

Series:

Working Paper No. 2000/057

Subject:

Bank deposits Bank resolution Banking Commercial banks Deposit insurance Distressed institutions Financial crises Financial institutions Financial sector policy and analysis Financial services Moral hazard

English

Publication Date:

March 1, 2000

ISBN/ISSN:

9781451847765/1018-5941

Stock No:

WPIEA0572000

Pages:

80

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