# PUBLIC AWARENESS

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**Abstract**

Public information and awareness are factors often overlooked in deposit
insurance system design. For a deposit insurance system to be effective,
it is essential that the public be informed about the benefits and
limitations of the system. Public awareness is particularly important
for newly established deposit insurance systems. Although the costs of
ensuring that the public is informed may be considerable, the need for
public awareness should not be underestimated.

# Many countries with established systems have widely publicised the terms and conditions of deposit insurance coverage to ensure that depositors are aware of the systems in place to limit the probability of runs in the event of the failure of an insured institution. It also is important to make sure that depositors are aware of coverage limitations in terms of amounts and types of accounts covered in order to avoid the presumption that all deposits and other financial products are protected.

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# PUBLIC AWARENESS

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# Public information and awareness often are overlooked in the design of a deposit insurance system. In order for a deposit insurance system to be effective, it is essential that the public be informed about the benefits and limitations of the system. Public awareness is particularly important for newly established deposit insurance systems or when an existing system undergoes a significant change. Although the costs of ensuring that the public is informed may be considerable, the need for public awareness should not be underestimated.

This paper discusses the role that public awareness plays in
contributing to an effective deposit insurance system.[^1] It identifies
the objectives of a public-awareness program and the target audiences
that may need to be reached. Other features of a public-awareness
program that are discussed include what information needs to be
communicated, which communication techniques are effective, and what
lessons have been learned with respect to promoting public awareness.

# Background 

The need for public information and awareness stems from the unique
intermediary role played by depository institutions. Research studies
that have focused on the special role of depository institutions have
stressed the ability of such institutions to fund illiquid assets with
highly liquid liabilities. This liquidity-transformation function, which
enables depository institutions to provide useful services, however, is
also the source of depository institutions' susceptibility to
destructive deposit runs.

The belief that a run will occur can be self-fulfiling. If depositors
are uncertain whether their funds are safe, there is a greater
likelihood that they will withdraw their funds when problems or the
perception of problems develop at a depository institution. If
withdrawals occur in sufficient number and scale, a run may ensue and
even spread to other institutions. The result is that economic activity
is affected adversely. If runs become widespread, there may be a
contraction in the economy overall. As discussed below, a well-designed
public-awareness program can reduce the likelihood that depositors will
withdraw their funds when problems develop at an insured institution.

# Objectives of a Public-Awareness Program 

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# The effectiveness of a public-awareness program is tested when institutions fail or there is a wave of failures. In times of financial stress, countries can least afford to discover that the public is not adequately informed about the features of the deposit insurance system. Thus, it is important to craft a public-awareness program as soon as possible after the decision is made to establish a deposit insurance system. It also should be noted that efforts to inform the public about deposit insurance should be viewed in a long-term context. As discussed below, experience has shown that the characteristics of the deposit insurance system need to be publicised regularly so that the credibility of the system is strengthened and maintained.

A public-awareness program can be designed to achieve several
objectives. First, a well-designed program can disseminate information
to promote and facilitate understanding of the concept of deposit
insurance and the main features of a country's deposit insurance system.
In this regard, the public needs to be educated about both what deposit
insurance can and cannot accomplish. With respect to the latter,
unrealistic expectations can undermine a deposit insurance system and
contribute to financial instability.

An effective public-awareness program also can help to restore and
promote confidence in the financial sector. This objective is
particularly important when countries may be experiencing waves of
failures and/or when countries may be transitioning from a blanket
guarantee to limited coverage of deposits. If depositors have trust in
the safety of money placed in insured institutions, economic recovery
can be achieved more quickly and financial stability can be enhanced.

Third, a public-awareness program can help to disseminate vital
information to depositors when failures of insured institutions occur.
The public should be assured that the deposit insurer, together with the
bank supervisory agency, is working to resolve any such failures quickly
and that insured deposits are safe. In the event an insured depository
institution is closed, a public-awareness program, for example, can
provide guidance to depositors as to how to file claims. The ability of
a deposit insurer to provide such information has implications for how
effectively it can fulfil its mandate and for how quickly depositors'
funds are restored and depositor confidence is maintained.

Finally, a well-designed public-awareness program carries benefits for
the officials and staff of the deposit insurer. A public-awareness
program helps to put a human face on the entity that provides deposit
insurance. Such a program can create an image of solidity,
professionalism, public-mindedness, and efficiency for the deposit
insurer. As a result, greater public acceptance may make the job of the
deposit insurer easier, especially when failures of depository
institutions occur.

**Target Audiences**

In designing an effective public-awareness program it is critical to
identify the target audiences that must be reached. Moreover, which
audiences need to be targeted may change over time, depending on what
goals have been identified and the stage of development of the deposit
insurance program. For example, if a country characterised by stable
economic conditions is considering introducing a limited-coverage
deposit insurance system, the target audiences may be narrow. If a
country is experiencing some financial instability, the target audiences
may need to be relatively broad.

One of the most important audiences is the staff of depository
institutions, especially operations and front-line staff. Employees of
depository institutions should be trained to answer questions about
deposit insurance because they are most likely to be queried by
depositors and others seeking information.

Present and potential depositors in insured depository institutions
should be targeted separately. In this regard, small, unsophisticated
depositors should receive special attention. Depository institutions
should inform customers of their membership in a deposit insurance
system. Information should be readily available about the terms and
conditions of coverage. If an institution is able to withdraw from a
deposit insurance system, this fact should be reported immediately and
in writing to its customers.

In addition to the need to inform employees of insured depository
institutions and depositors about the benefits and limitations of
deposit insurance, there are various market segments that may need to be
targeted. These special market segments might include one or more of the
following groups: trade unions, professional and business associations,
retirees, and students in high schools and post-secondary institutions.
Because of the potential reach of these groups in shaping opinion and
disseminating information, it may prove useful to prepare information on
deposit insurance targeted specifically toward these groups.

If a public-policy objective of the deposit insurer is to generate
savings, officials might consider preparing and disseminating
information on deposit insurance to guest workers or expatriates living
abroad where there is significant movement of persons into or out of a
country for employment and/or other reasons. The existence of
information on deposit insurance may influence decisions of individuals
as to where they want to deposit their funds. Such decisions may have
implications for a given country's foreign-exchange earnings and thus
its economic and financial condition.

Deposit insurance officials should not overlook the need to inform the
media about the main features of a country's deposit insurance system.
When problems develop in insured institutions it is especially crucial
that the media have accurate information on deposit insurance and a
deposit insurer's effectiveness in helping to resolve failures of these
institutions, if applicable. If pertinent, accurate information is
provided to the media, the latter can help to quell fears about the
safety of depositors' funds, if necessary.

Finally, deposit insurance officials should strive to keep lawmakers and
other public officials apprised of the features of the deposit insurance
program. Educational efforts that target public officials should discuss
how deposit insurance relates to the other components of a country's
safety net. Moreover, if problems develop in insured institutions that
strain the resources of the deposit insurer, the latter may require
financial assistance from the government. Any such assistance may be
more readily forthcoming if public officials have a thorough
understanding of the objectives and features of the deposit insurance
system.

# Communication Techniques or Strategies

A broad range of options is available to deposit insurance officials
regarding how to disseminate information about deposit insurance to the
various audiences discussed above. Care should be taken to select or
devise communication strategies that guarantee the best returns in terms
of the objectives of the public-awareness program. This decision is
likely to be influenced by factors such as: demography, the level of
literacy, size of the population, budgetary constraints, and the
intended target audience. Deposit insurers might want to contract for
the services of experts at companies that specialise in marketing,
communications, or other fields. The costs of contracting for outside
experts should be weighed against the potential benefits to be gained.
In general, most countries rely on both the print and electronic media
in different degrees and with varied support from insured depository
institutions or government information units to implement their public
education or awareness programs.

**Educational materials**

Deposit insurers in many countries have relied heavily on the
publication and dissemination of educational materials to inform target
audiences about deposit insurance. Such educational materials include
the following: fliers, fact sheets, pamphlets, brochures, booklets and
other written documents. These materials are either distributed directly
or *via* the Internet, insured institutions, and consumer advice
bureaus. For example, officials in some countries have prepared
comprehensive books or guides to enable employees of insured
institutions to provide their depositors and others with accurate and
complete information about insurance coverage. These instructional
materials are designed to assist insured institutions in developing
in-house training programs on deposit insurance.

**Print and broadcast-media coverage**

Deposit insurers have adopted different approaches with respect to
print- and broadcast-media coverage. This reflects the public-service
view that the print and broadcast media are excellent communication
vehicles for disseminating information to a broad audience. In fact, in
some countries it is mandatory that insured depository institutions
indicate in advertisements that they are members of the deposit
insurance system that is operating in the country. Deposit insurance
systems that have developed logos and tag lines find it helpful to
include or highlight the logo and/or tag line in any media
advertisement.

Governments in other countries may prohibit advertisement of membership
in deposit insurance systems. Such prohibitions may have been put in
place to prevent insured institutions from using such membership as a
competitive edge. It should be noted, however, that even in countries in
which media advertising is prohibited, insured depository institutions
are expected to inform their customers about deposit insurance coverage
issues. The preferred approach in these countries is for depository
institutions to provide such information in written form to individual
customers.

**Product registers**

A number of countries require insured depository institutions to provide
depositors and other customers with written lists that stipulate which
products offered by the institution are actually insured. Such product
registers serve several purposes. First, the registers help to ensure
that customers receive general information about deposit insurance.
Second, such registers help to differentiate insured and uninsured
products, thereby reducing possible confusion on the part of potential
and actual customers. For example, deposit insurance officials in some
countries review the product registers before insured depository
institutions disseminate them to customers.

There is widespread agreement that materials that are made available to
customers should be written so that they are readily understood. Deposit
insurers in countries with multicultural populations have recognised the
need to provide written materials on deposit insurance in the major
languages spoken by residents.

**Guest lectures and presentations**

Deposit insurance officials in some countries have found it beneficial
to give guest lectures and presentations to various groups in their
respective countries and even abroad. These may be done in coordination
with professional groups and associations. Potential audiences include,
for example, consumer groups, civic associations, employers and unions,
financial journalists, and trade associations. Members of such groups
can often reach even broader audiences as a result of personal
relationships, thereby helping officials to disseminate accurate
information on deposit insurance issues. As noted earlier, officials of
deposit insurance systems may want to schedule appearances before groups
of citizens who may be living abroad in certain population centers. If
these efforts prove to be successful, they can have a beneficial effect
on a country's foreign-exchange earnings.

**Public hotline/helpline**

Deposit insurance officials may find it useful to establish a toll-free
telephone number that can be accessed easily by both local and overseas
depositors. This service can help to provide customers with answers to
their questions or to refer them to the proper individual(s) who can
help them with particular issues. Telephone hotlines are particularly
useful when an insured institution encounters problems and members of
the public are unsure about the safety of their deposits. In countries
with multicultural populations, deposit insurance officials may want to
provide access to the telephone hotline service in the major languages
spoken in the country.

**Web site**

With the growth in the use of the Internet, many deposit insurers have
established Web sites. These Web sites provide basic information on the
features of the deposit insurance system in operation in a particular
country. If information is given about coverage rules and insurance
limits it can be an effective way to communicate with the populace. A
well-designed Web site can be used to complement the information and
personal service available through use of the public hotlines discussed
above. It also is an effective venue for posting other information, such
as information pertaining to employment opportunities and asset
disposition. Web sites also can generate feedback from the public either
on operational issues or complaints about certain banking practices.

**Public forums/educational-outreach seminars**

Deposit insurers in a number of countries have found it useful to hold
or conduct public forums and educational-outreach seminars. In some
countries, deposit insurers conduct regional seminars on a regular basis
on deposit insurance issues for bankers and other interested parties.
These seminars stress the need for insured institutions to inform their
employees, particularly those employed in a front-line or operational
capacity, about deposit insurance coverage and other issues.

Deposit insurance officials in some countries have made seminars a
fundamental part of their public-awareness program. For example,
seminars may be aimed at returning residents and conducted in tandem
with representatives from other departments in the government that
oversee financial-services activities. Such seminars focus on the mix of
measures that have been put in place by the government to protect
depositors and investors in the country's financial system. These
measures include the strengthening of the legislative framework, the
enhanced roles and functions of the various regulatory agencies, the
introduction of an explicit deposit insurance scheme, and further
investment and savings opportunities in the country's money and capital
markets.

Deposit insurance officials should not overlook the need to hold
briefings for elected government officials and other policymakers.
Deposit insurers in a number of countries have recognised the need to
keep an open and ongoing dialogue with lawmakers. Open communications
particularly are important when countries revamp their deposit insurance
systems.

# Operational Issues

Deposit insurers in a number of countries have found it useful to
conduct opinion surveys before mounting a public-awareness campaign. The
purpose of such surveys is to identify what strategy or strategies
should be employed and what audiences should be targeted. Although such
surveys may be costly, the potential benefits often outweigh the initial
costs that must be incurred. After the survey has been conducted, the
focus of the public-awareness campaign should be refined to achieve the
desired objective(s).

Subsequently, the results of the public-awareness program should be
evaluated to determine its effectiveness. Experience has shown that such
surveys may need to be conducted every few years. If failures are
relatively rare, the public may forget about the purpose of deposit
insurance. Surveys provide useful benchmark information and help to
identify whether new measures are needed to keep the public informed
about deposit insurance issues.

Experience has shown that the prime responsibility for the
public-awareness campaign generally rests with the deposit insurer. If
deposit insurers wait for others to suggest that a public-awareness
campaign is warranted, such suggestions may come too late or not at all.
However, in seizing the initiative, deposit insurers should solicit the
views of officials of insured depository institutions. It is important
that the latter be consulted in crafting the public-awareness program
because their staff will be key to disseminating information on deposit
insurance.

One obvious question that must be addressed is who should pay for the
public-awareness campaign. The answer to this question partially rests
on what type of deposit insurance system will be or has been adopted. If
a purely private scheme is sought or is in place, the costs of any
public-awareness campaign should be bourne by the private sector. In
cases where the scheme is government administered and privately funded,
the costs should be bourne by the private sector. In the case of a
program funded by the government, the costs should be bourne by the
government. If funding comes from more than one source, the underwriting
of costs should be a collaborative effort involving the deposit insurer,
member institutions, banking associations or the government.

# Special Considerations

There are certain times when the timing and content of a
public-awareness program are especially important. These include when a
country is transitioning from a blanket guarantee to limited-coverage
deposit insurance and when an insured depository institution is closed.

**Transitioning to limited coverage**

It is vitally important that the public understand what is occurring and
why once a decision has been made to lift a blanket guarantee and adopt
limited coverage. Any movement to reduce coverage can be misconstrued
and perceived negatively by the public if they feel that something "is
being taken away from them." In addition, efforts to scale back coverage
may raise unwarranted doubts about the health of depository institutions
and/or the financial system overall. Thus, it is crucial to explain to
the public why limited coverage is being adopted and what benefits will
accrue to the populace.

In transitioning to limited coverage, it is important that the proposed
timetable, whether on a fast-track or gradual basis, be communicated to
the public. If the timetable cannot be met as the transition proceeds,
the public should be informed about what changes have occurred to alter
the initial timetable. Subsequently, the revised timetable must be
widely publicised.

**Failures of insured institutions**

When insured depository institutions are closed, it is important that
depositors be reassured that their claims will be settled promptly and
that they know how to proceed in order to receive payment. Failure
situations may be localised or they may encompass an entire country or
even cross borders. Deposit insurance officials need to have plans
already prepared detailing how they will inform depositors and other
creditors about their rights and the procedures for seeking
reimbursement.

There are numerous methods that can be employed to inform the public. In
some countries, deposit insurers provide on-site information services to
assist depositors in the filing of claims and advertise in major
newspapers when failures occur. Other methods utilised include
television and radio spots informing depositors about the failure(s) and
how to proceed with the filing of claims. Press conferences convened by
the deposit insurer also can be an effective means to inform the public.
As noted earlier, it is important to establish and maintain contacts
with the media when the decision is made to establish a deposit
insurance system. Such contacts can prove invaluable when failures occur
and may need to be enlisted to help allay the fears of the public.

A public-awareness plan to address issues related to closures of insured
depository institutions should be carefully conceived before it is
needed, not hastily prepared after a closure has occurred. A
well-designed public-awareness program can help to counteract the
potentially disruptive effects of failures of insured institutions.

# Conclusions 

In order for a deposit insurance system to be effective, it is essential
that the public be informed about the benefits and limitations of the
scheme. Although the costs of ensuring that the public is informed may
be considerable, the need for public awareness should not be
underestimated. It is important to craft a public-awareness program as
soon as possible after the decision is made to establish a deposit
insurance program. Experience has shown that subsequently the
characteristics of the deposit insurance system need to be publicised
regularly so that the credibility of the system is strengthened and
maintained.

In designing an effective public-awareness program it is critical to
identify the target audiences that must be reached. One of the most
important audiences is the staff of depository institutions, especially
operations and front-line staff. The primary responsibility for the
public-awareness campaign generally rests with the deposit insurer. Care
should be taken to select or devise communication strategies that
guarantee the best returns in terms of the objectives of the
public-awareness program.

There are certain times when the timing and content of a
public-awareness program are especially important. When a country is
transitioning from a blanket guarantee it is important to keep the
public well-informed. The public must understand what is occurring and
why after the decision has been made to lift a blanket guarantee and
adopt limited coverage. In particular, the proposed timetable, whether
on a fast-track or gradual basis, should be communicated to the public.
A well-crafted program can help to bring about financial recovery.

Similarly, the timing and content of a public-awareness program are
important when insured institutions are closed. Depositors must be
reassured that their claims will be settled promptly. They also need to
know how to proceed in order to receive payment. A public-awareness plan
to address issues related to actual failures should be carefully
conceived before it is needed. A well-designed public-awareness program
can help to counteract the potentially disruptive effects of failures of
insured institutions.

[^1]: The Subgroup includes representatives from Jamaica (coordinator),
    Hungary, Japan, Mexico, and Philippines.