The European Forum of Deposit Insurers (EFDI)
The European Forum of Deposit Insurers (EFDI) was created in 2002. Its objective is to promote active European cooperation in the field of deposit guarantee schemes and investor compensation schemes. It is a unique place where members and partners exchange their experiences as practitioners. They work together to analyse European and national regulations. Thus, the association facilitates the exchange of expertise and information among guarantee schemes and responsible institutions.
At the end of 2019, the EFDI's members included 57 deposit guarantee schemes and 13 investor compensation schemes from 48 countries of the enlarged Europe.
Organisation and governance of the EFDI
Since it was founded, the European Forum of Deposit Insurers (EDFI) has brought together all European deposit guarantee and investor compensation schemes, beyond the borders of the European Union. They exchange their experiences as practitioners, share their thoughts on the European legal framework and the local characteristics of their activity. The EFDI has close relationships with the European Commission, the European Central Bank (ECB), the European Banking Authority (EBA), the European Banking Federation (EBF) and the International Association of Deposit Insurers (IADI).
Following a revision of the statutes unanimously approved by its members, since 2018 the association has had a General Secretariat, a small, permanent structure that facilitates its operation and expands the scope of the services it provides to its members. The recruitment of the Secretary General, followed by the recruitment of an office manager in 2019, gave new momentum to the association’s activities.
The EFDI’s Board of Directors is comprised of eight members elected at the general meeting. Thierry Dissaux, Chairman of the FGDR’s Executive Board, was elected chairman of the EFDI in September 2016 for a three-year term and was re-elected in September 2019. Through its management of this association, the entire FGDR team is playing a particularly active role in the European and international dimension of deposit guarantee and investor compensation schemes.
The association’s structure
In 2017, a revision of the EFDI’s statutes, which took place over a long period of time, was approved almost unanimously by the community of 57 European member guarantee schemes.
This change in the statutes resulted, in particular, in:
- a redefinition of the missions so as to encompass resolution activities;
- the ability to issue non-binding guidance to members;
- better integration of members and issues relating to investor compensation schemes;
- enhanced governance for the EU Committee, central to the EFDI’s activities, through an independent EU Management Executive dedicated to the European Union’s schemes.
This change in the statutes has given the EFDI greater freedom to act and a demanding and ambitious roadmap which is still being deployed.
The EFDI’s activities
The roadmap adopted by the association for the coming years covers ambitious objectives, particularly in terms of:
- work dedicated to the European Union's deposit guarantee schemes (EU Committee);
- communication programmes for the guarantee schemes with the public and the media (Public Relations and Communication Committee);
- scheduling and conducting stress tests (Stress Test Working Group);
- research on risk-based contribution systems, changes in covered deposits, etc. (Research Working Group);
- cooperation among investor compensation schemes (ICS Working Group).
The EFDI’s European Union Committee
Within this EU Committee and under the guidance of its management body, the EU Management Executive, several work priorities have been launched:
- the DGSD Implementation Initiative (D2I), which is working on a complete review of the implementation of the 2014 DGSD2 directive by the European Union’s schemes so as to assess the difficulties encountered and solutions developed by each scheme in fulfilling the European regulation’s objectives;
- the Banking Union Working Group, which is examining the feasibility and technical procedures for applying the objectives of the Banking Union, and particularly the EDIS project;
- the Cross Border Working Group, which is responsible for harmonising the working methods of the European schemes in terms of cross-border cooperation and compensation and which began work on updating and expanding the Multilateral Cooperation Agreement drafted by the EFDI in 2016 within the “Home/Host Cooperation Initiative” (H2C) working group.
Cooperation for cross-border compensation
- The “Home/Host Cooperation Initiative” (H2C) has enabled European guarantee schemes to structure the management of cross-border compensation collaboratively, in accordance with the provisions of the European DGSD2 directive.
- In fact, such compensation has major implications in terms of coordination and communication capability among crisis teams, configuration of the processes, information and data exchanges, financial exchanges, dialogue between computer applications, not to mention issues such as responsibility, assumption of costs and cross-participation in stress tests.
- It is appropriate to implement standardised cross-border cooperation procedures so as to compensate depositors quickly, communicate in their language and efficiently handle their requests for information or complaints. The "H2C" project led to the possibility of signing multilateral or bilateral cooperation agreements that define the terms of cooperation and their respective responsibilities regarding cross-border compensation.
- The European Banking Authority (EBA) noted that this text was perfectly in line with the guidance it has published on this subject. It expressly validated this agreement and recommended that all the guarantee schemes concerned approve it. At the end of 2018, more than 30 of the European Union's deposit guarantee schemes formally joined it. Bilateral agreements are being drawn up setting out, country by country, certain operational options.
More information at efdi.eu
International Association of Deposit Insurers (IADI)
The International Association of Deposit Insurers (IADI) is the world's leading international organisation in the field of deposit insurance. The IADI was founded in 2002 with the aim of increasing the effectiveness of deposit insurance worldwide by issuing guidelines and promoting international cooperation among deposit insurers. The IADI was created following the work of various multinational working groups (1999/2001) tasked by the Financial Stability Forum (now the Financial Stability Board (FSB)) to consider the development of international core principles for deposit insurance systems.
The Core Principles for Deposit Insurance
The banking sector has seen increasingly comprehensive prudential regulations developed on an international scale by the Basel Committee. Consequently, the IADI has always focused on the issues of international banking regulation at the G20 level.
The Financial Stability Board (FSB) is an informal group formed during the G20 London summit in April 2009 as a successor to the Financial Stability Forum. It encompasses 26 national financial authorities (central banks, finance ministries, etc.), a number of international organisations and groups that develop standards in the field of financial stability. It works closely with the IADI on deposit insurance systems.
More information at: financialstabilityboard.org
The association’s strategic priorities are to ensure the dissemination of the core principles for deposit insurance worldwide, provide relevant technical cooperation and expertise to jurisdictions that express a need for this, and produce detailed studies and analyses on the practice and impacts of deposit insurance in terms of financial stability.
The IADI’s focus on analysis and research resulted in the drafting of the “Core Principles for Deposit Insurance”. These Core Principles are the basic doctrine of all deposit insurers around the world. They define the minimum requirements that must be met by deposit guarantee schemes to achieve their assigned objective of contributing to the financial stability and security of the banking system.
The Core Principles were first issued by the Basel Committee on Banking Supervision (BCBS) and the IADI in June 2009. They are the basic doctrine of all deposit insurers around the world. They are also the standard used by the International Monetary Fund as the basis for the periodic assessments of national financial sectors (Financial Sector Assessment Program - FSAP) that it conducts in Member States.
Following the study results of a peer review conducted under the direction of the Basel Committee on Banking Supervision (BCBS), in October 2014 the IADI issued a revised set of Core Principles. They were approved by the BCBS as well as the FSB, the IMF, the World Bank and the EFDI.
The new 2014 version of the Core Principles endeavoured to:
- address the issues of moral hazard and resolution;
- define increasingly stringent action principles such as the seven-day target compensation period for depositors and reducing the compensation initiation times;
- provide rules related to funding and management and monitoring or elimination of conflicts of interest.
After being approved by the international community, the Core Principles for Deposit Insurance were added to the set of international standards used by the G20 countries, the IMF and the World Bank.
The IADI’s contribution to financial sector assessment programmes
A “Methodology for the Assessment of Compliance with the Core Principles for Deposit Insurance” was drawn up and subsequently approved in December 2010. This methodology guide provides for:
- a self-assessment method that each deposit guarantee scheme can apply to its own structure;
- a more general financial sector assessment programme (FSAP) managed by the IMF and the World Bank ; and
- comparative analysis programmes headed by the FSB and the G20.
The methodology was submitted to the FSB and is now included in its set of 12 International Standards.
In accordance with its Core Principles, the IADI has produced an Assessor Handbook, an additional key element of deposit insurance standards. This handbook is a detailed technical guide to each of the Core Principles for FSAP assessors and clearly defines the standard components applicable to deposit insurers.
More information at: financialstabilityboard.org