Regional Conference of Deposit Insurance Systems



On behalf of  H.E. Dr. Ziad Fariz, the Governor of the Central Bank of Jordan (CBJ) and the Chairman of the Jordan Deposit Insurance Corporation (JODIC), H.E. Dr. Adel  Al-Sharkas, the Deputy Governor of the Central Bank of Jordan, has inaugurated the joint MENA & Africa Regional Committees' Meetings and Conference entitled: Building upon the Revised IADI Core Principles: DIS Compliance Lessons".

The event, which was held during the period 16-17 February 2015 at the Kempinski Hotel- Ishtar Dead Sea, was hosted by the Jordan Deposit Insurance Corporation and sponsored by the International Association of Deposit Insurers (IADI). The conference covered more than (15) working papers in the areas of key issues in the revised version of the Core Principles such as: Governance, Funding Sources, Reimbursement Process, Crisis Management, in addition to the key role played by International Financial Institutions (IFI ) Resources for technical assistance, sharing experiences in newly set up DIAs or upgrading previously established schemes, and the last but not least the Islamic deposit insurance; whereas the enriched experiences of the deposit insurance systems of Malaysia and Indonesia were illustrated.

 

H.E. Dr. Adel Al-Sharkas pointed out in his opening speech that the global financial crisis has underscored the need for financial stability as a crucial input for sustainable and economic growth in addition to the essential presence of effective deposits insurance corporations in order to contribute to the financial stability.

Dr. Al-Sharkas demonstrated that has been affected since the year 2009 by multiple of diverse external shocks, the global and financial crisis followed by the eruption of regional challenges which resulted in the disruption of 's natural gas supply, and the large burden of Syrian refugees.  In spite of limited resources and growing challenges, adopted a comprehensive economic reform program for the years 2012-2015 with fiscal and monetary reforms necessary to maintain macro-and-financial stability. The financial stability objective of the Central Bank of Jordan (CBJ) gives high priority to the stability and resilience of the banking system in which represents more than 95% of the financial system. Under this objective, the CBJ issued new regulations to update the corporate governance principles aiming at enhancing and strengthening the risk management framework. 

Herewith, it is worth mentioning that the financial indicators of Jordanian banking system characterized with strong and solid soundness, the capital adequacy ratio for the whole system currently stands at 17.7%, which is highly above the 12% requirement of the central bank, liquidity ratio also remains high at 149.2%, the non-performing loans remained around 6.2%, with provisions covereing  82.7% of these loans.

In this connection and in recognition of the need for a formal explicit and limited deposit insurance scheme, Jordan Deposit Insurance Corporation was established in the year 2000. JODIC forms currently a qualitative supplement to the integration of the financial safety-net that aims at supporting the desired financial stability in the Kingdom. 

JODIC also succeeded in promoting savings and enhancing public's confidence in the banking system despite its relatively short history. It currently provides full protection to more than 97% of the depositors at the member banks and accumulates a sufficient and adequate reserves' fund that exceeds JD 500 million. 

H.E. Dr. Adel Al-Sharkas ended his speech by illustrating JODIC's aspirations towards an integrated DI system benchmarked with the best international practices that are represented in the IADI-BCBS Core Principles. In this respect, JODIC proposed an amendment to its Law to require mandatory membership of Islamic banks instead of the voluntary membership since the Islamic financial industry is growing at rapid pace worldwide. In fact, deposits held at Islamic banks represent currently a considerable percentage of 20% of total deposits held at the banking system in the Kingdom.  JODIC also aspires to expand its mandate from pay-box with extended powers to become a risk minimize in cooperation with the Central Bank of Jordan, in order to protect the vast majority of depositors at the banking system in the Kingdom and thus to achieve its public policy objectives.




H.E. Mrs. Jumana Hamed, the Director General of JODIC, extended her deep gratitude and appreciation to the International Association of Deposit Insurers (IADI) for its remarkable support and collaboration with the regional committees of the IADI Executive Council. H.E. Mrs. Hamed indicated that IADI has been making significant contribution in tackling the challenges, sharing information and expertise among deposit insurers, as well as activating dialogue with regulators and central bankers. IADI contributes to the financial stability around the world by promoting international cooperation and formulating best practices represented in issuing Core Principles for Effective Deposit Insurance Systems issued by the IADI and the Basel Committee on Banking Supervision (BCBS).

Mrs. Hamed has pointed out that the recent financial crisis played a crucial role in terms of the international appreciation for the importance of deposit insurance industry not only for the protection of individual depositors but also for the increasing significant role that deposit insurers play in achieving and maintaining public's confidence and in preserving financial stability during times of stress and difficulties. Mrs. Hamed mentioned that the explicit deposit insurance systems have significantly increased from 84 jurisdictions in the year 2003 to 112 jurisdictions by the end of 2013.  

During the opening ceremony, the keynote speech was delivered by the President of the International Association of Deposit Insurers (IADI). He highlighted the importance of this conference since it is the first regional conference that tackled the amended version of the recently revised IADI-BCBS Core Principles and accordingly the implementation's challenges and lessons to be learned by the deposit insurance systems to be into alignment with the revised CPs.



From the other side of the spectrum, JODIC signed a memorandum of understanding with the Palestine Deposit Insurance Corporation (PDIC). This step marks an important achievement that includes the exchange of experiences, capacity building and information sharing to enhance financial stability in and Palestine and to achieve effectiveness of both deposit insurance systems in line with the best international practices.

 On the other side the Middle East and North Africa Regional Committee, and the Africa Regional Committee held their annual regional meetings in the year 2015. The meetings covered regional interests and common issues that are reflected through sharing information, ideas and experiences in both regions.

It is worth noting that the event witnessed a wide participation from several international and regional organizations that served the purpose of sharing expertise and information in the deposit insurance industry and emphasizing the fundamental changes relevant to the recently revised IADI-BCBS Core Principles and their vital impact on contributing to the stability of financial systems worldwide.

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