EFDI international conference: contribution of deposit insurers is key for safe financial markets and financial stability

26 May 2023

The International Deposit Guarantee and Financial Stability Conference of the Forum of European Deposit Insurers is being held in Hungary for the first time. The event, hosted by the 30-year-old NDIF, has attracted participants from over 60 countries. The presentations and panel discussions at the conference will focus on regulatory changes in deposit insurance schemes. In his opening speech, Dr Csaba Kandrács, Deputy Governor of the Magyar Nemzeti Bank and Chairman of the FDIF Board of Directors, mentioned the place of deposit insurance in the liquidation hierarchy, its role in resolution and across the border, and on the development of the European Deposit Guarantee Scheme.

The European Forum of Deposit Insurers (EFDI) is holding its first annual general meeting and international conference in Hungary in its decades of existence, with the assistance of the host National Deposit Insurance Fund (NDIF). The EFDI organises its AGM once a year, which includes four days of committee and working group meetings (10-15 topics) and an investor protection and deposit insurance conference from 24-27 May. The extraordinary event has attracted speakers and participants from over 60 countries, from Europe and beyond, for example from North America and Asia.

The NDIF was the first in Central Europe to start operations in 1993, and in 2002 it was a founding member of the International Association of Deposit Insurers (IADI) and the EFDI. In the course of its history, the Hungarian deposit insurer has compensated some 250,000 depositors following the closure of 20 credit institutions. The largest number of such payments, 65,000 deposits, will be made in 2022-23 following the withdrawal of the operating licence of Sberbank Magyarország Zrt. (in liquidation). The current event is also a tribute to the NDIF celebrating its 30th anniversary this year, which was able to win the right to organise today’s major event thanks to a successful application.

The presentations and panel discussions at the conference held yesterday in Budapest focused on changes in the regulatory environment for deposit guarantee schemes from the perspective of the stability of the European financial market. In his opening speech, Dr Csaba Kandrács, Deputy Governor of the MNB and Chairman of the Board of Directors of the NDIF, underlined yesterday that in addition to the global crises, the European deposit insurance system is also facing a number of regulatory challenges. According to the European Commission’s announcement, the role of deposit guarantee schemes in the liquidation hierarchy could be radically transformed, and their role in resolution funding and in cross-border payments could increase.

The Hungarian deposit guarantee scheme believes that the preferred creditor status of deposit insurance should be maintained in liquidations. Recent proceedings under such rules have resulted in much higher NDIF liquidation proceeds compared to previous proceedings before this special rule. This ultimately reduces the banking system’s ex-post NDIF asset replenishment obligations, and therefore there is a positive benefit for the financial sector, the Deputy Governor stressed.

In addition to these, other important changes will be the expected amendments to the regulation of European deposit insurance at EU directive level, for example, a possible change in the definition of available financial assets or a reduction in cash compensations. Another important issue will be the creation of the European Deposit Guarantee Scheme, the third pillar of the European banking union, the Deputy Governor added.

The full-day conference, the EFDI’s biggest event, will bring together speakers and participants from the European Union, including the relevant regulatory and supervisory authorities (European Commission, European Banking Authority, Single Resolution Board), representatives of several worldwide organisations (e.g. World Bank), heads of other international organisations (e.g. Financial Stability Institute) and almost all EFDI members (currently 66 European deposit guarantee schemes and guarantee institutions).