The Financial Stability Board (FSB) has undertaken a peer review of the deposit-insurance regimes in nations around the world to assess each system’s resilience, the need for reform, and the extent to which deposit insurance affects the broader ability of governments to resolve troubled financial institutions under stress. At this point, the FSB is simply assessing each nation’s regime, but its findings could lead to changes that clarify home/host deposit-insurance responsibilities, advance FSB initiatives to develop cross-border resolution protocols and otherwise strengthen banking against future crises. Importantly, the FSB’s focus includes an effort to prevent moral hazard, with the peer review seeking to advance deposit-insurance regimes that ensure some loss when banks fail.
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