This framework is expected to enhance the public’s trust in the banking sector, which is an important aspect of financial stability.
The implementation of a prefunded deposit insurance scheme will bring about closer adherence to the Key Attributes of Effective Resolution Regimes and to the Core Principles of Effective Deposit Insurance Systems issued by the Financial Stability Board and the International Association of Deposit Insurers respectively. South Africa has a well regulated and stable banking sector, but one that is also quite concentrated.