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8 J. Banking Reg. 1 (2006-2007)

handle is hein.journals/jlbkrg8 and id is 1 raw text is: www.palgrave-journals.com/jbr Editorial Challenges for deposit insurers in resolving bank failures Journal of Banking Regulation (2006) 8, 1-3. doi:10.1057/palgrave.jbr.2350039 This special edition of the Journal of Banking Regulation is comprised of papers, which were presented at the Fourth Annual Conference of the International Association of Deposit In- surers (IADI) in Taipei, Taiwan from the 27th to 29th September, 2005. The subject chosen for the Conference was 'Challenges for Deposit Insurers in Resolving Bank Failures'. IADI's mission is to contribute to the effectiveness of depositor protection arrange- ments by developing guidance and promoting international cooperation. Its vision of sharing deposit insurance expertise is fulfilled through its annual conferences and other such events, which are also used as a means to highlight the work of the Association in developing gui- dance. The Fourth Annual IADI Conference was an opportunity for IADI to present two new Guidance papers related to the resolution of bank failures and to expose important work that has been going on in related areas. It is fitting for a Journal such as this, which aims to be both scholarly and practical, to have the opportunity to publish papers presented on a topic which is of considerable and contem- porary importance to all of those involved whether as bankers, bank regulators, central bankers, politicians, economists, financial sec- tor lawyers or as officers of a deposit insurance agency. The papers cover a wide range of important issues, all of which are relevant to the question of the protection of bank depositors, and they are written by leading international experts from a variety of jurisdictions and different professional backgrounds. Readers of the Journal will already be aware of the important role which banks play in the modern world, both from an economic and social perspective, and the role that banks play in transforming risks. Financial crises in which banks have failed have been an all too common phenomenon throughout the world in recent years. In the latter part of the previous century, a number of countries experienced very serious systemic crises that caused governments to implement blanket guarantees, while others may only have had to deal with the occasional problem bank. One of the constituent parts of a financial safety net is the provision of some degree of protection to those individuals who place their savings in banks. This may range from simply giving depositors legal priority on bankruptcy to the provision of some degree of compensa- tion using a deposit insurance system. The idea of providing explicit limited protection to bank depositors often proves to be surprisingly controversial and any discussion of the subject tends to produce a wide range of views, both for and against. Some commentators are totally opposed in principle, as they believe that the problems created by an increase in moral hazard (and other factors) are greater than the benefits gained by providing explicit protection to depositors. Among those who support the concept there remains a wide range of issues, which require further consideration. It is well known that effective deposit insurance arrangements preserve the benefits of heightened financial stability and small depositors' protection without at the same time increasing moral hazard or reducing market discipline. Among those who support this concept there remains a wide range of © 2006 Palgrave Macmillan Ltd, 1745-6452 $30.00 Vol. 8, 1 1-3 Journal of Banking Regulation 1

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