Munich Personal RePEc Archive

Uninsured Deposits: Relevance and Evolutions Over Time

Van Roosebeke, Bert and Defina, Ryan and Wahyuni, Tri (2023): Uninsured Deposits: Relevance and Evolutions Over Time. Published in: International Association of Deposit Insurers Policy Brief No. 8

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This global stock-taking of deposit insurance coverage ratios may offer a good first proxy for estimating the relevance of uninsured deposits. However, it is important to realise that the IADI Core Principles for Effective Deposit Insurance Systems (Core Principles) as global standards for deposit insurance focus on aggregated coverage ratios. Despite overall compliance with these standards by a jurisdiction, the share of deposits not covered by deposit insurance at a number of individual banks within this jurisdiction may be very high, which may give rise to increased bank-run risks. Deposit insurance standards currently do not explicitly account for this risk, which is implicitly assumed to be dealt with by prudential regulation and/or supervision. Ongoing research may offer further insights.

Building on this stock-taking exercise, ongoing research will look into measures applied across the globe by deposit insurers that may help manage the risk of sudden and massive withdrawals by uninsured depositors. These will include the use of differentiated coverage levels, including temporary high balances, high and/or blanket coverage for payment and settlement accounts and voluntary top-up coverage levels.

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