Step up efforts to forestall bank crisis: Mohamud
Players in the Deposit Insurance system have been urged to jointly step up their crisis preparedness strategies and management aimed at effectively forestalling potential crisis and bank failures globally.
In his remarks to the International Association of Deposit Insurers (IADI) Technical Assistance Workshop in Abuja Nigeria, the Kenya Deposit Insurance Corporation Chief Executive Officer Mohamud A. Mohamud cautioned that if not quickly addressed, emerging bank-related issues could potentially jeopardize the efficacy of safety-net arrangements and prudential roles of the traditional banking system.
He cited the 2007-2009 global financial crisis, saying it had exposed the increasing relevance of deposit insurance as a buffer for financial stability. “The crisis led to the review of some of the design features of explicit deposit insurance system in many countries to accommodate emerging developments in the domestic and global financial system,” he observed.
Mr. Mohamud, who is also the Africa Regional Committee-IADI Chairman, further affirmed the need for all deposit insurers to be part of institutional framework, that enhance continued communication and coordination involving financial safety-net participants related to system-wide crisis preparedness and management, which is in line with IADI Core Principle 6.
Mr Mohamud added: “This TAW, is designed to re-emphasis that deposit protection has been a key component and a strong pillar of sound financial system as it contributes to financial stability which is a key component of a healthy economy, contributing directly to inclusive growth and development.”
The ARC Chairman informed delegates that ARC-IADI had enhanced its capacity building, calling on members to support each other in areas of technical assistance particularly for emerging jurisdictions.
The workshop under the theme “Normality in Turbulent Periods: The Stabilizing Role of Deposit Insurance”, was addressed by Nigeria’s Minister of Finance, Mrs Zainab Ahmed, Governor, Central Bank of Nigeria Mr Godwin Emefiele and outgoing IADI Secretary Mr. David Walker among others. It drew participants from deposit insurers across the African continent and beyond.