BIS's Financial Stability Institute and the International Association of Deposit Insurers host eighth conference on bank resolution, crisis management and deposit insurance
9 February 2018
The Financial Stability Institute (FSI) and the International Association of Deposit Insurers (IADI) organised their eighth joint conference on bank resolution, crisis management and deposit insurance on 31 January-2 February at the Bank for International Settlements (BIS) in Basel, Switzerland. The conference was hosted by Fernando Restoy, Chairman of the FSI, and Katsunori Mikuniya, IADI President, Chair of the Executive Council and Governor of the Deposit Insurance Corporation of Japan. The event was attended by close to 250 central bankers, banking supervisory officials and deposit insurers representing 130 financial authorities in 80 jurisdictions worldwide.
During the conference's initial keynote address, Mark Branson, Chief Executive Officer of the Swiss Financial Market Supervisory Authority and Chair of the Financial Stability Board Resolution Steering Group, highlighted that the official sector had come a long way since 2008 in terms of developing global standards on resolution and that, in fact, the international policy development work on bank resolution had largely been completed. Having said that, Mr Branson emphasised that there was still a lot to be done in terms of ensuring that the resolution policy framework would work successfully in practice. He said that this required not only a consistent adoption of resolution standards in national statutes around the world but also close interaction between national resolution authorities and banking institutions to make sure that individual resolution plans were in a state where they could plausibly be executed or that there were feasible alternatives in the toolkit that could be deployed in unexpected circumstances.
In his keynote address, Sir Paul Tucker, Chair of the Systemic Risk Council and Senior Fellow at the Center for European Studies at Harvard University, welcomed the fact that resolution and resolvability have become embedded in the work of the official sector, although this was still confined to specialists. It had not yet had sufficient impact on lender of last resort policy and prudential supervision. At the same time, he expressed concerns that the official sector community seemed to have slipped into the shorthand of saying that the too-big-to-fail issue had been solved, whereas in fact the failure of a big financial institution would still be messy. The key point was that, with bail-in available, the social costs would not be so great that the only realistic option for governments would be to bail out shareholders and bondholders.
Closing the event, Agustín Carstens, BIS General Manager, pointed out that, despite the substantive progress in developing bank resolution policies, one fundamental challenge was that bank failures were discrete events, leaving little room for pre-implementation monitoring, or for ex post policy adjustments and recalibrations. As such, it would be crucial to share experiences and exchange information on the practices of bank resolution and crisis management. He said that the BIS, through the Basel Process and in particular the FSI, stands ready to further promote this open dialogue within the official sector.
In the various panels, speakers and participants discussed:
- The progress and challenges associated with the implementation of resolution frameworks not only for banks but also for non-bank financial institutions.
- Practical implementation issues related to core elements of the global standards on resolution such as bail-in, total loss-absorbing capacity (TLAC) and valuation.
- The intersection between banking supervision, resolution and deposit insurance through discussions on early supervisory intervention approaches and recovery plans.
- Lessons learned from last year's bank failures.
- Future challenges and opportunities in the resolution and deposit insurance areas, including the ones arising from the developments in financial technology.
Note to editors
The FSI was jointly created in 1998 by the BIS and the Basel Committee on Banking Supervision. Its main objectives are to: (i) promote sound supervisory standards and practices globally and support full implementation of these standards in all countries; (ii) keep supervisors updated with the latest information on market products, practices and techniques; (iii) provide a venue for policy discussion and sharing of supervisory practices and experiences; and (iv) promote cross-sectoral and cross-border supervisory contacts and cooperation.
These objectives are achieved through the production of FSI Insights on policy implementation and other publications, meetings and conferences with senior officials, and FSI Connect, the BIS's web-based learning tool for financial sector supervisors. For more about the FSI, visit www.bis.org/fsi.
The International Association of Deposit Insurers (IADI) was formed in May 2002 to enhance the effectiveness of deposit insurance systems by promoting guidance and international cooperation. Members of IADI conduct research and produce guidance for the benefit of those jurisdictions seeking to establish or improve a deposit insurance system. Members also share their knowledge and expertise through participation in international conferences and other forums. IADI currently represents 84 deposit insurers, eight Associates and 14 Partners. IADI is a non-profit organisation constituted under Swiss law and domiciled at the BIS in Basel.
IADI is an internationally recognised standard setter and evaluator. Its standard, the Core Principles for Effective Deposit Insurance Systems is included in the FSB's Compendium of 12 Key Standards for Sound Financial Systems and is used by the IMF and World Bank as part of their Financial Sector Assessment Program reviews of jurisdictions.