STRUCTURE AND ORGANISATION

# Abstract

# 

Whether a deposit insurance system will be effective in meeting its
public-policy objectives will be determined, in part, by how the system
is structured and organised. Structure and organisation encompasses a
deposit insurance system\'s mandate, roles and responsibilities; its
governance arrangements; and its human resources and other operational
considerations. Mandates, roles and responsibilities vary widely among
deposit insurance systems. It is critical that they be well-defined and
consistent with the stated public-policy objectives of the scheme. In
order to discharge its mandate effectively, a deposit insurer should
have access to requisite information on its member institutions. The
choice of the governing structure for the deposit insurance system
usually is influenced by the mandate and the degree to which the deposit
insurer is legally separate from the other safety-net participants or
those having an interest in deposit protection and financial-sector
stability. Governance systems can be enhanced through the use of sound
strategic- and risk-management processes and good internal-control and
audit systems. Arrangements should be made to ensure that the governing
structure is accountable and transparent. Human resources and other
operational issues are a critical elements of the structure and
organisation of a successful deposit insurance system. Key issues are:
attracting and retaining qualified employees, determining the
appropriate mix between dedicated staffing and outsourcing, ensuring the
confidentiality of information supplied to employees, and guaranteeing
that employees receive legal protection against lawsuits for their
action in the normal course of their activities.

STRUCTURE AND ORGANISATION

The ability of a deposit insurance system to fulfil its public-policy
objectives is greatly influenced by its structure and organisation. The
development of an appropriate structure and organisation for a deposit
insurance system requires an examination of a number of factors. These
include the deposit insurance system\'s specific mandate, its roles and
responsibilities; governance arrangements; human resources; and other
operational considerations. This paper will identify the relevant
structural and organisational issues for deposit insurance systems, and
will examine the trade-offs associated with choosing a particular
structure and organisation. This paper represents the work of the
Subgroup on Structure and Organisation.[^1]

####### Mandates, Roles and Responsibilities 

The mandate of an organisation encompasses the set of official
instructions given to an organisation to perform its task(s).
Organisational roles and responsibilities generally arise from the given
mandate. A number of issues should be taken into account when setting
out mandates, roles and responsibilities for a deposit insurance system.
These include: the linkages between the deposit insurer's mandate and
its public-policy objectives and country circumstances; the degree to
which mandates are defined in law or by other means; the degree of
coordination with other organisations that comprise the financial safety
net; and the processes in place for reviewing mandates.

Mandates, roles and responsibilities vary widely among deposit insurance
systems. They can focus on the relatively limited paybox
responsibilities, such as the collection of premiums and the payment of
claims to depositors, or they can be broader and focus on
risk-minimisation responsibilities. Such responsibilities may include
risk assessment and management, supervision, and intervention and
failure resolution.[^2]

Mandates also can be influenced by the degree to which a deposit
insurance system is either privately or publicly sponsored, administered
or financed. In purely private systems---those sponsored and
administered by private-member associations with no government
involvement or financial backing---mandates tend to reflect objectives
consistent with their members\' wishes.[^3] There are, however, some
privately administered deposit insurance systems that have legislative
underpinnings and significant public elements. These systems legally may
be required to pay depositors\' claims, may be given access to
government assistance, and may include the participation of bankers and
government officials on their governing bodies. In such cases, their
mandates, roles and responsibilities may reflect a wider range of
concerns such as promoting confidence and financial-system stability.

On the other end of the spectrum are purely public systems, which entail
government sponsorship, administration and financing. Their mandates
tend to emphasise objectives consistent with broader public concerns.
Nevertheless, many so-called publicly sponsored and administered systems
may rely on private financing from their membership and may rely on
private-sector advisers and the views of member financial institutions.
In practice, virtually all deposit insurance systems have some private
and public characteristics. This public/private-sector mix, and
resultant mandates, roles and responsibilities are country-specific.

### Linkages to public-policy objectives 

The public-policy objectives of the deposit insurance system and its
mandate should be consistent in order to enhance the effectiveness of
the system. Serious problems can result when they diverge. The issue of
consistency is relevant across all deposit insurance systems.

### Specification of mandates, roles and responsibilities 

The degree to which mandates, roles and responsibilities are
well-defined is another important consideration. The advantage of a
well-defined system is that there is less ambiguity, because the rules
are clear to all parties, including depositors, insured institutions,
and safety-net participants. This can reinforce stability and confidence
in the deposit insurance system. By making transparent information on
the roles and responsibilities of the deposit insurer, and the terms and
conditions of deposit insurance, incentives for greater accountability
and good governance are provided.[^4] The specification of the
accountability regime, terms and conditions of insurance---such as
membership, coverage, and the reimbursement process---and on the
coordination and information-sharing arrangements between the deposit
insurer and other safety-net participants should be well-defined.

Formal specification can be accomplished either through law or
regulation, a policy statement or agreement, or by private contract.
Although some private systems may not be defined in legislation, they
can be defined alternatively in private contracts. Even in cases where
the deposit insurer is not a separate legal entity---for example, a
department of a central bank---there are benefits to having well-defined
mandates and responsibilities, including improved coordination with the
activities of other departments within the organisation.

### Coordination with other safety-net participants

In order to discharge its mandates effectively and meet its objectives,
a deposit insurer should have access to requisite information on its
member institutions. The need for adequate and timely information among
members of the safety net is particularly critical because few deposit
insurers have broad supervisory authority. At a minimum, access to basic
information about member institutions, including information on current
financial condition and the existence of problems, needs to be assured.
Although informal arrangements can work well in some circumstances, it
is often necessary that information sharing be mandated either through
legislation or by private agreements, or both, given the sensitivity of
member-specific information and the challenge of maintaining open
communication channels. These should set out what is to be shared and by
whom, as well as the type, level of detail, and frequency of the
information to be exchanged. In all cases, the confidentiality of the
information should be assured. There also should be goodwill among the
heads of the agencies, indicating that they are firmly committed to
information exchange.

Coordination of the activities of the safety-net participants is
important for ensuring an effective deposit insurance system and for
avoiding inefficiencies and conflicts between safety-net participants.
The need for cooperation among safety-net participants should be taken
into account when determining the mandate, roles and responsibilities of
the deposit insurer. This is particularly crucial in situations when the
deposit insurer is accorded a broad mandate, such as the role to
intervene in member institutions\' affairs or act as receiver or
liquidator. Experience has shown that clarity and coordination can
contribute not only to the effectiveness of a deposit insurance system
but also to the effectiveness of the entire financial safety net.[^5]

### Process for the periodic review of mandates

It is important to ensure that a process exists for the periodic review
of the mandate, roles and responsibilities of a deposit insurance
system. Rapidly changing conditions in the overall economy, and the
financial sector in particular, make it necessary to undertake a
situational analysis.[^6] The review process can include a regular
assessment and report to stakeholders of the system's effectiveness in
meeting its mandate, including any recommended changes.

### Governance Arrangements 

Other important considerations relate to the structure and organisation
of a deposit insurance system. These include: the structure of the
governance system; the composition of the governing body and its duties
and responsibilities; internal-control processes; and transparency and
accountability regimes.

### Structure of governance

The choice of the governing structure for the deposit insurance system
usually is influenced by the mandate and the degree to which the deposit
insurer is legally separate from the other safety-net participants. One
option is to assign responsibilities for the insurance function to an
existing entity. This option has been adopted in many cases where the
insurance function is primarily public. Many countries have chosen to
locate their deposit insurance function as a department within a central
bank or supervisory authority. This approach can be more cost-effective
from an administrative point of view than the creation of a separate
entity. It also allows the deposit insurer to tap into staff resources
and skills from the existing entity. This type of arrangement also may
facilitate information sharing and coordination.

There are several drawbacks to not having a separate deposit insurance
entity. The primary disadvantage is that the existing entity---whether
it is a central bank, supervisory or other authority---may have
difficulty separating its other responsibilities and interests from
those of the deposit insurance function. It may be difficult to ensure
that the interests of the deposit insurer are given appropriate weight
in the decision-making process. In addition, it may give rise to
conflicts because the objectives of the deposit insurer may conflict
with those of the existing entity.

Alternatively, the deposit insurance function can be set up as a
separate legal entity. In this case, a governance choice is to vest a
board of directors or managing board with the responsibility to direct
the affairs of the organisation and to be held responsible for the sound
functioning of the deposit insurance system. Board systems appear to be
the predominant choice in cases where the deposit insurer has separate
legal status from other safety-net participants or, in the case of
private schemes, industry members. Board systems also may be utilised
when the deposit insurer is designated as an autonomous subsidiary of a
central bank, industry association or other organisation. In public
systems, the board can be made responsible directly to the legislature
or to the supervisory authority. In private arrangements, the board can
be made responsible to its member institutions through an industry
association.

There are advantages associated with a separate legal status and a board
structure. In particular, the deposit insurer may be more focused and
effective in carrying out its often unique mandate, roles and
responsibilities. Opportunities for conflicts are reduced compared to a
departmental model. However, a board structure usually requires stronger
accountability and transparency regimes as well as greater
administrative resources than other alternatives. Legally separate
deposit insurance systems also may face greater challenges in terms of
information sharing and coordination with other safety-net participants.

# Composition and duties of the governing body

The governing body of a deposit insurance organisation usually includes
individuals who have decision-making authority. In addition, the input
and views of other safety-net participants or relevant stakeholders are
often taken into account. In order to improve effectiveness and to
ensure the integrity of the deposit insurer, members of the governing
body should understand the organisation\'s activities and the
environment in which it operates. The members should be subject to some
form of a \"fit-and-proper\" test, be free from serious conflicts of
interest, and be as independent as possible from undue political or
industry influence. It should be noted, however, that some of the
best-qualified candidates for appointments to a governing body are the
same people who may have conflicts of interests---individuals such as
regulators or those affiliated with member institutions. Different
systems make different judgments about who should be permitted to serve
in a governing capacity and how conflicts should be managed. In general,
the narrower the mandate of the deposit insurance system, the less
likely is the potential for conflicts of interest.

For deposit insurance systems that are predominately administered
privately through a board arrangement, the board composition may include
active member institutions. Deposit insurance systems that are jointly
administered may include members affiliated with financial institutions
as well as government officials on their board. However, care needs to
be taken to ensure that such arrangements do not lead to conflicts of
interest that can be detrimental to the deposit insurance system. A
number of public systems reserve positions for independent private
members---those not currently active in the affairs of member
institutions---in order to obtain additional expertise and advice. Some
public schemes allow for members who are actively affiliated with member
institutions. However, most systems discourage this practice because the
interests of such members may conflict with the interests of other
stakeholders and the confidentiality of information could be
compromised.

Governance systems often can be enhanced through the use of special
advisory bodies or committees. Such committees can include industry
representatives, particularly in systems that may exclude their direct
participation in the governing body. These committees also may include
industry representatives who can provide their expertise and views on
certain matters, such as real estate. Once again, however, the use of
outside experts should not compromise the confidentiality of information
or permit conflicts of interest to arise.

The delineation of the duties and responsibilities of the governing body
is a critical aspect of good corporate governance. It is important for
members of the governing body---such as members of the board, management
and employees---to understand and to meet their responsibilities. It
also is important to evaluate regularly the board\'s effectiveness in
fulfiling its responsibilities.

In many countries, the governing body is given authority for the
selection and oversight of senior management, and the responsibility to
review management, operations and the performance of the organisation.
This can be extended to require that the governing body ensure that
effective strategic- and risk-management processes are in place.[^7] The
governing body's authority also may include the ability to remove any
officer or employee of the organisation for cause, and to deal with
confidentiality, ethical business conduct, and conflict-of-interest
issues. Other approaches may provide the board with the authority, under
statute, to prepare and issue rules and regulations necessary for the
sound functioning of the organisation. Some systems with a focus on risk
minimisation may provide extra authority, through statute, to make
regulations affecting the affairs of member institutions.

### Internal-control processes

Internal-control processes---by which deficiencies are identified and
corrected---are important governance considerations. Sound
internal-control and audit processes play a crucial role in ensuring the
integrity and efficiency of operations, and they can enhance corporate
standards of accountability. Internal audit programs typically involve
regular compliance and accountability reviews and the monitoring of
performance according to set standards and policies.[^8] Some systems go
so far as to include public-service delivery and operational quality
reviews. It can be particularly helpful if the internal-control
processes of the deposit insurer correspond to the general requirements
for audit purposes set for financial institutions or comparable
government institutions.

### Accountability, transparency and disclosure

Appropriate accountability, transparency and disclosure regimes for the
deposit insurer and other safety-net participants are important
structure and organisation issues. It is important that the deposit
insurer, regardless of its structure, be held accountable for its
decisions and actions. In circumstances where deposit insurance is
provided through a legally separate entity, accountability can be
bolstered by ensuring that the board of directors and senior management
are responsible and accountable to their primary stakeholder. In many
public systems utilising an independent board structure, the
organisation is made accountable in law to the public, often *via* the
legislature or an appropriate ministry of the government. Input from
member institutions and other interested parties can be channeled
through the use of special advisory bodies or committees. Achieving the
right balance between accountability and independence will depend, to a
large extent, on country-specific factors.

In predominantly private systems, the deposit insurance organisation
often is held directly accountable to its member institutions or
industry association. Where a private system is mandated by law, the
deposit insurer often is made accountable to both its members and the
public *via* the legislature, or to a department or ministry of the
government.

Setting up an appropriate transparency and disclosure regime also can
provide benefits to a deposit insurance system. Transparency refers to
the process by which information on the system and its actions is made
available and readily understood by the public. Ensuring that the system
is transparent and disclosing information on a timely, consistent and
accurate basis can enhance accountability, sound management and the
functioning of the system. Typically, this involves making transparent
the deposit insurer\'s mandate, roles and responsibilities. In addition,
information should be disclosed about a deposit insurer\'s activities,
decision-making processes, financial position (for example, disclosure
of audited financial statements that adhere to generally accepted
accounting principles), funding arrangements, costs associated with
failure resolutions and other relevant information for the provision of
deposit insurance.[^9] A number of deposit insurance systems require a
full consultative process with relevant stakeholders whenever changes
are proposed to the policy or legislative framework affecting the
system. This can be done as a matter of law or as a matter of
administrative process. The consultative process, including the time
frame, are often a function of the complexity and degree of controversy
surrounding any changes.

It is important to recognise the need for confidentiality and the
judicious release of information as appropriate. The extent and
frequency of information disclosed by deposit insurers varies
considerably among systems. Some systems regularly disclose detailed
reports on their activities, financial position, performance, funding
positions, and even information on the costs associated with individual
failures and problem institutions. Other systems release only a limited
amount of information to the public. This reflects legitimate concerns
that the disclosure of too much information (particularly information on
the costs associated with failures and anything related to the financial
position of individual member institutions) could negatively affect
public confidence and the stability of the financial system.[^10]
Ultimately, an appropriate balance should be struck between the desire
to promote accountability and sound management through disclosure, and
the need to ensure confidence and financial-system stability.

### Human Resources and Operational Considerations

Human resources are a critical element of the structure and organisation
of a successful deposit insurance system. Issues of interest are:
ensuring the availability of human resources to meet the operational
objectives of the system; compensation, incentives, training and other
measures to attract and retain skilled staff; and confidentiality and
legal-liability issues relating to employees.

A number of approaches have been used to ensure the availability of
qualified persons to meet the operational objectives of deposit
insurance schemes. Some deposit insurers rely primarily on a body of
dedicated staff, others emphasise the use of outsourcing, while still
others utilise a combination thereof. Country-specific factors, such as
the mandate and structure of the deposit insurance system, as well as
the availability of skilled resources, influence staffing decisions.

Having a fully dedicated staff allows for a high level of control over
the functions of the deposit insurer and its ability to maintain tight
control over service standards and quality. These functions include:
executive decision-making; the management of operational policies,
systems and practices; the strategic- and risk-management processes; and
contingency planning. However, having a large proportion of dedicated
staff can lead to higher fixed costs and may reduce the flexibility of
the insurer to respond to changes in staffing requirements. It should be
noted that the latter concern can be addressed to some degree by
cross-training employees in multiple skills.

Alternatively, the deposit insurer can assign certain tasks to outside
service providers through outsourcing. Outsourcing can include borrowing
staff as needed from another safety-net participant or maintaining
contracts with private-sector firms to undertake certain activities. It
also is possible to outsource specific tasks while maintaining ultimate
responsibility and control through the use of dedicated staff. Some
countries have used this approach in the case of estate administration.
External service providers can be required to file detailed business
plans with the insurer before commencement of their activities.

Advantages of outsourcing include flexibility to allocate staff, the
ability to reduce staffing costs during idle periods, and the ability to
take advantage of the efficiencies and specific expertise that service
providers may offer.[^11] Outsourcing also can create arm's-length
arrangements that may benefit a deposit insurer, such as in the case of
outsourcing asset-disposition duties. In some systems, the deposit
insurer is the major creditor and it may be perceived that there is
conflict of interest if the insurer undertakes these roles directly,
particularly if the deposit insurer is a priority creditor. Outsourcing
these functions also may free the deposit insurer from any rigidities in
government rules, such as those regarding restrictions on negotiated
sales.

Major disadvantages of outsourcing include increased difficulty in
controlling events as well as difficulties in ensuring consistent
quality across the organisation. Given the difficulty in predicting the
incidence of troubled banks and failures, service providers may not be
able to respond quickly or adequately to an increased demand for their
services.[^12] Experience suggests that the net savings associated with
outsourcing may not be lower than from maintaining a dedicated staff.

Because of the trade-offs associated with staffing issues, many deposit
insurance systems rely on dedicated staff and outsourcing. For example,
some systems assign dedicated staff to core-management functions within
their organisations, while non-core functions are assigned to outside
providers. Nevertheless, care must be taken to ensure that quality
standards are met.

The ability to attract and retain qualified employees and establish
competitive compensation is another key human-resource challenge for
deposit insurance systems. Many schemes, both public and private, have
limited financial resources and often have difficulty providing
competitive compensation relative to the financial-services
industry---and in some cases, even relative to other safety-net
participants. Furthermore, some systems may face constraints in securing
adequate resources to train and develop employee skills.

A variety of approaches have been undertaken to address human-resource
issues. Some have focused on efforts to ensure that salary ranges are
competitive with defined markets. Another approach has been to offer
opportunities for career progression through succession planning and
training and development. For example, training and development can be
undertaken in-house in situations where the dedicated staff of the
organisation is large or if outside courses are unavailable. In other
instances the deposit insurer may share training and development
programs resources with other safety-net participants or industry
associations. There also has been a growing recognition among deposit
insurers of the benefits to be gained from international training,
assistance, and collaboration. Although such assistance and
collaboration can enable deposit insurers to share their knowledge, the
ability to secure necessary funding for such activities may be beyond
the capabilities of some deposit insurance systems. Additional
assistance may be required from stakeholders such as governments and
international organisations.

Most deposit insurance systems need to rely on confidential information
collected from institutions and other safety-net participants to fulfil
their mandates. Thus, measures to ensure that this information remains
confidential are important considerations for employees. A number of
countries have introduced provisions regarding secrecy and
confidentiality regarding all documents, information and records
pertaining to matters dealt with by the deposit insurance entity.

In terms of legal-liability issues, situations exist in some countries
where employees of deposit insurers and other safety-net participants
are held personally liable for actions taken on behalf of their
organisations. Although this arrangement may have been instituted in an
effort to improve accountability, a number of countries noted that it
has resulted in serious impediments to employee and organisational
performance. The lack of legal protection can reduce incentives for
employees to be vigilant in the carrying out of their
mandates---particularly in cases where mandates emphasise promptness in
detection, intervention and closure of troubled institutions. The
Working Group recognised the importance of statutory indemnification and
recommended that staff should receive legal protection against lawsuits
for their official action in the normal course of deposit insurance
activities or supervision.[^13]

# Information technology and other issues

Information systems and the use of technology are other important
operational areas for deposit insurance systems. Although specific needs
may vary depending on the type of deposit insurance system in place and
its mandate, access to timely, accurate and consistent information can
be extremely beneficial.

Information management systems that process information quickly and
accurately can help a deposit insurer detect and deal with problems. In
some cases, this information can be generated from systems within the
deposit insurer, although in other cases, it may be necessary to
retrieve information from other safety-net participants.

### Conclusions 

-   Mandates, roles and responsibilities can vary widely among deposit
    insurance systems. It is critical that the mandates, roles and
    responsibilities are consistent with the stated public-policy
    objectives of the deposit insurance system.

-   Formal specification of the mandates, roles and
    responsibilities---either in law, a formal policy statement or
    agreement, or by private contract---and the establishment of
    relationships and linkages with other safety-net participants
    enhance the effectiveness of a deposit insurance system. The
    mandates, roles and responsibilities of the deposit insurance system
    should be clear to all parties concerned. This will reinforce
    stability and confidence in the financial system. It also will
    contribute to greater accountability and sound governance of the
    deposit insurance system.

-   In order to discharge its mandate effectively, a deposit insurer
    should have access to requisite information on its member
    institutions. The need for adequate and timely information is
    particularly critical because few existing deposit insurers have
    broad supervisory authority.

-   The coordination of the activities of the safety-net participants is
    important for ensuring an effective deposit insurance system and for
    avoiding inefficiencies and conflicts between safety-net
    participants.

-   A variety of forms of governance can be utilised by a deposit
    insurance system. The choice of the governing structure usually is
    influenced by the mandate and the degree to which the deposit
    insurer is legally separate from the other safety-net participants.

-   The composition of the governing body of a deposit insurance
    organisation should include individuals who understand the
    organisation\'s activities and the environment in which it operates.
    These individuals should have decision-making authority. In
    addition, the input and views of the safety-net participants and/or
    relevant stakeholders often are taken into account by the governing
    body. The members should be subject to some form of a
    \"fit-and-proper\" test, be free from serious conflicts of interest,
    and be as independent as possible from undue political or industry
    influence.

-   Governance systems can be enhanced through the use of sound
    strategic- and risk-management processes and good internal-control
    and audit systems. Arrangements should be made to ensure that the
    governing structure is accountable and transparent.

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-   Human resources are a critical element of the structure and
    organisation of a successful deposit insurance system. The ability
    to attract and retain qualified employees and establish competitive
    compensation are key challenges for most deposit insurers.

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```
-   A number of approaches have been used to ensure the availability of
    qualified persons to meet the operational objectives of deposit
    insurance schemes. Some deposit insurers rely primarily on a body of
    dedicated staff, others emphasise the use of outsourcing, while
    still others utilise a combination thereof. Country-specific
    factors, such as the mandate and structure of the deposit insurance
    system, as well as the availability of skilled resources, influence
    staffing decisions.

```{=html}
<!-- -->
```
-   Most deposit insurance systems need to rely on confidential
    information collected from institutions and other safety-net
    participants to fulfil their mandates. Thus, measures to ensure that
    this information is made available to the deposit insurance system
    and remains confidential are important.

```{=html}
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```
-   The lack of legal protection for employees can reduce incentives for
    deposit insurers to be vigilant in carrying out their
    mandates---particularly in cases where mandates emphasise early
    detection, intervention and closure of troubled institutions. The
    importance of statutory indemnification should be recognised and
    employees should receive legal protection against lawsuits for their
    action in the normal course of deposit insurance activities or
    supervision.

-   The ability to have in place information management systems to
    access and process information quickly and accurately is vital for a
    deposit insurer to detect and deal effectively with problems.

[^1]: The Subgroup is comprised of representatives from Philippines
    (coordinator), Canada, Germany, Jamaica, and The World Bank. This
    paper is designed for deposit insurance practitioners and other
    interested parties. It is primarily based on the judgment of the
    Working Group members and the experiences of various countries that
    have addressed structure and organisation issues for deposit
    insurance systems. The paper also incorporates use of the available
    literature on the subject.

[^2]: The issue of powers is discussed in another paper.

[^3]: A number of privately administered systems have restricted their
    stated objectives and mandates to providing deposit insurance solely
    for protecting small and unsophisticated depositors.

[^4]: There can be disadvantages associated with having too many
    characteristics of a system defined in law or private contracts. In
    some countries, operational features, such as staffing levels and
    budgets, are established by statute, which may diminish the
    flexibility of the deposit insurance system to respond to changing
    conditions.

[^5]: For a more detailed discussion of how coordination can be
    accomplished please refer to the paper on interrelationships.

[^6]: See the paper on situational analysis.

[^7]: Effective strategic management usually incorporates an
    understanding of the environment in which an organisation operates,
    the establishment of organisational objectives, the development of
    implementation plans to achieve objectives, and the capability to
    report and assess progress toward meeting objectives. Effective risk
    management typically involves having the capability to identify and
    assess risks inherent in an organisation\'s current and anticipated
    operations, initiate policies to deal with these risks
    appropriately, and regularly review and evaluate risk-management
    policies.

[^8]: High-risk areas such as cash, securities, premises and assets of
    closed banks can be covered in separate verification processes.

[^9]: Risk-minimisation deposit insurance systems with roles in
    examinations, interventions and failure resolution also may benefit
    from the disclosure of how these activities are set out and
    coordinated with those of the other safety-net participants.

[^10]: This form of disclosure can result in a reduction in asset values
    and losses to the deposit insurance system. In addition, the
    detailed disclosure of funding arrangements, particularly in cases
    where a deposit insurer is unclear on how it will fund the
    resolution of large member institutions in difficulty, also can
    erode confidence in the system or lead to conclusions by the public,
    rightly or wrongly, of the existence of a \"too-big-to-fail\"
    policy.

[^11]: Given the financial constraints many deposit insurance systems
    face in attracting and retaining highly skilled staff and experts,
    contracting out may provide a cost-effective alternative to access
    the skills of such individuals.

[^12]: In some situations the unavailability of experts can hinder
    attempts to outsource and lead to functions being carried out
    in-house.

[^13]: Financial Stability Forum Working Group on Deposit Insurance, *A
    Consultative Process and Background Paper*, June 2000.