Financial Safety Nets
A deposit insurance scheme for bank deposits or for policyholder and investor protection schemes that are designed for insurance and capital markets should be explicitly and clearly defined in laws and regulations that are known to and understood by the public, as already outlined in chapter 5. Even if those arrangements are specified in separate laws, the relationship to the supervisory agency and the government, as well as the related coordination arrangements, should be transparent. The operation of lender-of-last – resort—both in normal and crisis times—is normally provided for in central bank laws. The scope of emergency lending, however, is often part of a larger legal and operational framework that provides for cooperation arrangements among agencies for crisis management and financial stability policies.