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C entral bank’s policies on deposit insurance

C entral bank’s policies on deposit insurance. PhD Le Xuan Nghia Director of Banking Strategy Development Department State Bank of Vietnam. 1. Who is the actual deposit insurer in Vietnam?. SBV provides insurance to all banks.

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C entral bank’s policies on deposit insurance

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  1. Central bank’s policies on deposit insurance PhD Le Xuan Nghia Director of Banking Strategy Development Department State Bank of Vietnam International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007

  2. 1. Who is the actual deposit insurer in Vietnam? • SBV provides insurance to all banks. • DIV only provides insurance to small and medium financial institutions. International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007

  3. 2. Function of State Bank of Vietnam in deposit insurance activities • Insurance without premium collection. • As a guarantee agency for all banks • Providing insurance for all deposits of individuals, enterprises and other institutions. • Not being financed by premiums but from recapitalization of central bank. International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007

  4. 3. Banking supervision • Conduct overall supervision on operations of banks and cooperative credit institutions. • Conduct supervision as the owner’s representative of state-owned commercial banks. • Conduct off-site supervision. • Conduct on-site examination International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007

  5. 4. Supervision Effectiveness • Off-site supervision starts to be conducted on the basis of indicators of Basel I and CAMEL. • So far, fairly effective on-site examination has contributed to the stability of banking system. • Absence of Managerial information system • Supervision regulations and procedures need to be renovated. • Supervision system needs to be restructured. International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007

  6. 5. Strategic plan of deposit insurance • In the long term, DIV will be responsible for deposit insurance for the whole banking system. • The transition process needs a long-term roadmap which mainly depends on financial capacity, supervisory capabilities and credibility of DIV. • For the time being and in the medium term, central bank maintains its role to ensure the stability and sustainable development of the financial system. International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007

  7. 6. Coordination between DIV and SBV • Sharing information and analysis report and forecasting results. • Sharing the supervisory responsibility with effectiveness and low cost. • SBV supports to enhance the institution capacity and financial capacities of DIV. • Gradually sharing deposit insurance responsibilities to small-scale banks. International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007

  8. 7. Conclusions • Vietnam implements a true deposit insurance policy on banking system. • A traditional approach toward the safety guarantee policy on banking system • The current deposit Insurance policy need further improvement in accordance with international standards • A lack of transparent and feasible development roadmap for deposit insurance to take over some current function of the State Bank. • Restructuring roadmap of DIV is not well define in its development strategy. International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007

  9. Thank you ! Q & A International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007

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