Banking crises have led many countries to consider deposit insurance schemes to protect depositors and the banking system itself from the impact of bank failures. But should society be unconditionally responsible for under-writing banking decisions, even those imprudently taken? This paper considers the fine line that government authorities must tread between assuring the health of the banking system and encouraging recklessness on the part of individual banks by overprotecting deposits
Notes
"Draws on material originally contained in IMF Working Paper 96/83, 'Deposit insurance : obtaining the benefits and avoiding the pitfalls, ' by Gillian Garcia ... Alfred Imhoff prepared the present version"--Preface