session3 johnson chen

Slide1: 

General Guidance for Public Awareness of Deposit Insurance Systems Johnson Chen Chair of IADI Research & Guidance Committee President of Central Deposit Insurance Corporation (Taiwan) October 31, 2007

Slide2: 

Public Awareness about Deposit Insurance is Crucial

Outline: 

Outline Introduction Key guidance points Role and objectives Organizing an effective public awareness campaign Budget and resource Performance evaluation Special occasions Partnerships with other financial safety net players and stakeholders Conclusion

Introduction: 

Introduction To study the importance and objectives of a public awareness (PA) program for the DIS To study how a PA program can contribute to the effectiveness of a DIS To suggest guidance points in promoting PA on a DIS

Slide5: 

Mandates and objectives of a deposit insurance system (DIS) can not be achieved if its existence is unaware of. Assure safe deposits and counterbalance push factors that could trigger a bank run. Lack of awareness could lead to bank runs with significant ramifications within a short duration. Public trust should be built during periods of financial stability as a preventive measure to face the challenges in periods of financial instability Role and Objectives

Slide6: 

Public awareness about deposit insurance is crucial. All deposit insurers should promote public awareness about the deposit insurance system on an ongoing basis. Role and Objectives

Key Objectives of a PA Program: 

Key Objectives of a PA Program Build public confidence in the DIS As a tool for depositor protection thereby contributing to the safety and stability of the financial system. Build public confidence in the financial system As measures to strengthen the payment system and to promote savings. Enhance stakeholder awareness By providing key features of the deposit insurance system including its benefits and limitations. Role and Objectives

Key Objectives of PA Program (contin’d): 

Educate financial consumers to take greater responsibility For better financial investment decisions making and additional discipline on the banking system. Enhance consumer protection By promoting financial literacy of financial services consumers. Providing information to depositors Advising where the public can source information on deposit insurance easily. Key Objectives of PA Program (contin’d) Role and Objectives

Role and Objectives (contin’d): 

Role and Objectives (contin’d) The major objectives of a PA program are for the deposit insurers to accomplish their public policy objectives and enhance the effectiveness of a DIS through public education to promote the stability of the financial system.

Role and Objectives (contin’d): 

Role and Objectives (contin’d) Objectives of the PA programs should be clearly set out and consistent with the public policy objectives and mandates of a deposit insurer.

Slide11: 

Deposit insurers need to maintain credibility and visibility with financial consumers as an integral part of financial safety net. Failure to build credibility can undermine the effectiveness of DIS. Role and Objectives (contin’d)

Slide12: 

Deposit insurers should build credibility with depositors and stakeholders Role and Objectives (contin’d)

Organizing an Effective Public Awareness Campaign : 

Organizing an Effective Public Awareness Campaign Conducting pre and post campaign researches to ascertain awareness levels. Proper planning for a PA program in accord with developmental stages of a DIS. Proper long-term plan to set out strategies, target audiences, key messages, initiatives and channels.

Consideration for Designing a Public Awareness Campaign: 

Consideration for Designing a Public Awareness Campaign Target audience Messages Tools Special circumstances

Target Audience : 

Target Audience General public and depositors (small depositors regardless of age; younger generation) Institutional depositors Member institutions (front-line staffs; senior managers) Legislators and related authorities Media (well-informed media can provide fair and balanced reports for DIS.) Designing a PA Campaign

Target Audience (contin’d) : 

Target Audience (contin’d) Depositor insight is a key indicator of the relevance, reach and effectiveness of an ongoing PA campaign. Understanding depositor profiles and their different risk tolerances. Choosing right approaches and channels to meet the different needs and characteristics of various target audiences. Designing a PA Campaign

Target Audience (contin’d) : 

Target Audience (contin’d) Clearly identify principal target audience groups and sub-groups Designing a PA Campaign

Messages: 

Messages Integrate information that may affect depositors’ savings Information about benefits and limitations should be included. Written in precise but unsophisticated language to avoid ambiguity and misinterpretation Short and simple for easy absorption Consistent and coherent to avoid confusion Designing a PA Campaign

Communication Tools: 

Communication Tools Mass media Printed materials Website Lectures and seminars Deposit insurance signs or logos Product registers/product register code A toll free line Designing a PA Campaign

Communication Tools: 

Communication Tools Employ a wide variety of tools and channels of communication to ensure messages are conveyed to the target audience. Designing a PA Campaign

Budget and Resources: 

Budget and Resources Make budget allocations to build/maintain desired level of public awareness on deposit insurance knowledge among the target audiences. Adequate budget can support PA strategies and initiatives to be carried out effectively.

Budget and Resources (contin’d): 

Budget and Resources (contin’d) Consider external public relations experts and branding expertise to maximize effectiveness of the PA program and to support internal expertise deposit insurers. A deposit insurer should ensure adequate coordination with the public relations firm and monitor the services it provides to assure the objectives of the programs are achieved.

Performance Evaluation: 

Performance Evaluation Conducting campaign assessments Review advancement of stated objectives Identifying areas of improvement Continuous monitoring and measuring

Performance Evaluation: 

Performance Evaluation Deposit insurers should conduct regular, independent evaluations and reviews of awareness levels.

Special Circumstances: 

Special Circumstances In transitioning from a blanket guarantee to a limited coverage DIS, public awareness activities should begin as early as possible. This is to allow time for financial institutions and depositors to accept the changes and for the transition to achieve its intended results. Designing a PA Campaign

Special Circumstances (contin’d): 

Special Circumstances (contin’d) Develop a PA program well in advance to address potential crises/failures. This would ensure systematic, effective and efficient dissemination of relevant information, particularly in managing an imminent bank failure or resolution or rumours relating to such incidences. Designing a PA Campaign

Responsible Parties: 

Responsible Parties 1. Deposit insurers The primary responsible party 3. Financial safety net players Collaboration enhances PA and financial stability 2. Member institutions Partnerships with Other Stakeholders

Slide28: 

Member institutions One of the most important channels to reach the public due to their daily interactions with customers. Bank clients hold a special relationship with their financial institutions and they expect to be provided with relevant up-to-date information. Partnerships with Other Stakeholders (contin’d)

Slide29: 

Member institutions should be required by law to promote information about deposit insurance. Partnerships with Other Stakeholders (contin’d)

 Partnerships with Other Stakeholders (contin’d): 

Partnerships with Other Stakeholders (contin’d) A deposit insurer should develop strategic partnership for PA programs with other financial safety net players to ensure information consistency and maximize synergy. Other financial safety net players - role and functions are all aimed at promoting and contributing financial system stability.

Slide31: 

Rome was not built in a day ~ John Heywood

Conclusion: 

Conclusion Public Awareness about Deposit Insurance is Crucial and Fundamental

Conclusion (contin’d): 

Conclusion (contin’d) All deposit insurers need to promote public awareness on an ongoing basis. The importance of public awareness should never be underestimated irrespective of the mandates of a deposit insurer. Public awareness will enhance the effectiveness of DIS, reinforce consumer protection, and promote financial stability.

Slide34: 

Action is the proper fruit of knowledge!

Slide35: 

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