bui khac son general director deposit insurance of vietnam

1 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007

ENHANCING THE LEGAL FOUNDATION FOR DEPOSIT INSURANCE OPERATION IN THE

NATIONAL FINANCIAL SAFETY NET

Bui Khac SonGeneral Director

Deposit Insurance of Vietnam


CONTENT

PART I: FINANCIAL MARKET AND ITS SUSTAINABLE DEVELOPMENT

PART II: NATIONAL FINANCIAL SAFETY NET

PART III: LEGAL POSITION OF DEPOSIT INSURER IN THE NATIONAL FINANCIAL SAFETY NET

PART IV: ENHANCING THE LEGAL FOUNDATION FOR DEPOSIT INSURANCE OPERATION

PART V: CONCLUSION


PART I: FINANCIAL MARKET AND ITS

SUSTAINABLE DEVELOPMENT


FINANCIAL MARKET AND ITS SUSTAINABLE DEVELOPMENT

1.1. Development trend of financial market

1.2. Ensure the sound and sustainable development of financial market


Development trend of financial market

• Economic and financial interaction and dependency among countries in the region

• Financial crisis in 1997-1998: causes and effects

• Competition trend among world economies

• The combination between banking and insurance industry

• IT and communication revolution


Ensure the sound and sustainable development of financial market

• Legal foundation: legalize the relation among regulators; relation between regulators and financial institutions

• International standards on accounting and auditing system, risk management

• Protection of consumers, investors and depositors


PART II:




2.1. Concept and operational model

2.2. Role, function and responsibilities

2.3. Coordination between the participants of the Financial Safety Net

2.4. Set up the technical infrastructure


Concept and operational model

Min

istr

y of

Fi

nanc

eFinancial Safety Net

Firm legal foundation, clear division of roles and responsibilities and effective coordination mechanism

Dep

osit

Insu

rer

Cen

tral

Ban

k

Oth

er

supe

rvis

ory

Age

ncie

s


Role, function and responsibilities

• Mission • Objective

• Instruments • Strategies


Coordination between the participants of the Financial Safety Net

Country risks Consumer protection Depositor protection

Central Bank Ministry of FinanceDeposit Insurer

Financial Regulators and Integrated supervision system

i. Administrative and Technical

Structure

iv. Enforcement Capacity

iii.Onsite examination &

institutional building

ii. Offsite supervision and rating system

Systemic Supervision/Monitoring Capacity


Set up the technical infrastructure

Financial services providerCentral Bank

Ministry of Finance

Deposit Insurer

TCP/IP

Data sharing

Data sharing

Data sharing

http://cgl.microsoft.com/clipgallerylive/packages/j008/j0089252.cil




PART III:LEGAL POSITION OF DEPOSIT INSURER IN

THE NATIONAL FINANCIAL SAFETY NET


LEGAL POSITION OF DEPOSIT INSURER IN THE NATIONAL FINANCIAL SAFETY NET

3.1 Model and mandates of deposit insurer

3.2 Scope of operation


Models of deposit insurers

• Pay-box

• Pay-box with extended functions

• Risk minimizer

Risk minimizer

Pay-box with extended

functions

Pay-box


Scope of operation

• Types of insured deposit

• Identify the insured organizations– Commercial banks,

– Cooperative banks,

– Wholesale banks,

– Financial companies, – Insurance companies, – Securities companies.

• The function of risk-minimizer


PART IV:

ENHANCING THE LEGAL FOUNDATION

OF DEPOSIT INSURANCE OPERATION


ENHANCING THE LEGAL FOUNDATION OF DEPOSIT INSURANCE OPERATION

4.1 Objectives of National financial safety net

4.2 Enhancing the legal foundation of deposit insurance operation


Function of National financial safety net

• Ensure the sound and sustainable development of the financial system;

• Best protecting the consumers, investors and depositors;

• Minimize the use of state budget to resolve the failed institutions

• Restructure the financial system; Managing effectively the supervisory operation.

• Enhance the cooperation between Central Bank, Ministry of Finance, Deposit Insurer and State securities commission


Enhancing the legal foundation of deposit insurance operation

• The Law on deposit insurance

• Identify and determine the functions and mandates

• The independence status of deposit insurer

• Synchronization of legal documents related to deposit insurance operation

• Enhancing the legal capability of deposit insurer in conjunction with the capacity building and financial capability


PART V: CONCLUSION


CONCLUSION

5.1 Enhancing the legal foundation of deposit insurance operation

5.2 Proposal on enhancing the legal foundation of DIV


Enhancing the legal foundation of deposit insurance operation

• The coordination of National Assembly, Government, Ministry of Finance, Central Bank and Deposit Insurer.

• Deposit Insurer is an independent organization, with the mandates to protect the depositors and stabilize the financial system

• Adopt the international standards in financial sector and recommendations of IADI


Proposal of Enhancing the legal foundation of DIV

• Formulating the Law on deposit insurance in conjunction with the Law of State Bank, Law on credit institutions, Law on insurance, Law on Security and Consumer protection Law

• Improving the financial capability, human resources, IT infrastructure of DIV.

• Coordination between DIV with other supervisory agency pursuant to the Law on deposit insurance


Thank You !

[email protected]

bui khac son general director deposit insurance of vietnam

Documents

financial companies

financial safety netset

financial interaction

financial systembest

national financial safety

insurance companies

insurance industryit

mandates of deposit