Alessandra Perrazzelli: Deposit insurance and crisis management - the current landscape and the way forward

Speech by Ms Alessandra Perrazzelli, Deputy Governor of the Bank of Italy, at the 79th EXCO Week of the International Association of Deposit Insurers (IADI), Rome, 13 June 2024.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Ladies and gentlemen, good morning.

It is a great honour to be here at such a prestigious international event to share some thoughts about the role of deposit guarantee schemes (DGSs) in crisis management, also in the light of changes in the regulatory, operational and technological environment.

This occasion presents a meaningful opportunity to exchange reflections, experiences and insights from different standpoints, on the milestones reached and possible improvements to the safety net, as well as to promote fruitful dialogue among stakeholders.

1. Main features and the role of DGSs

DGSs play a crucial role in the management of bank crises. Robust bank supervision remains the best line of defence against a banking crisis, but a properly designed resolution and an efficient deposit insurance system are important components of a functioning financial safety net.

DGSs are essential to curb the likelihood of banking panics and are therefore a key policy feature for ensuring financial stability. Moreover, by collecting funds from the banking industry they help to shift the cost of insurance from the public finances to the banking industry itself.

DGS funds are primarily used to prevent bank runs by ensuring that depositors have immediate access to their insured funds in the event of a bank failure, thus acting as an ex ante safe device for depositors (the 'paybox mandate')