For prevention/insulation of an economy from financial crisis, deposit insurance systems across the globe need to be a more integral part of the overall safety net framework. In this context, there is a need to broaden the mandate of deposit insurers for effective resolution of banks of all sizes, as also to initiate preventive action and risk minimization.
It is also necessary to give powers to deposit insurers to fulfill their mandates. An effective bank resolution process with participation of deposit insurers would facilitate the ability of deposit insurers to meet their obligations, minimize resolution costs as well as disruption in markets, maximize recoveries on assets, reinforce discipline through legal actions and set up flexible mechanisms such as those facilitating bank acquisitions.