How Deposit Insurers Account for Inflation: Practices and Existing Guidance

IADI Guidance in place recommends a review of deposit insurance coverage levels more frequently than every five years if consumer price inflation is high. This review may not necessarily lead to a change of coverage levels. Although data availability on this topic is very limited, we find: On a self-reported basis and irrespective of inflation, only half of deposit insurers “periodically†review the coverage level. Although this share has been growing over the past decade, evidence from a sub-sample suggests that irrespective of inflation, periodic review of coverage levels by deposit insurers may regularly take place at intervals exceeding five years. Linking data on coverage review to historical inflation figures on an individual jurisdictional level, we found no substantial evidence that high inflation correlates with more regular periodic review of coverage levels. As to changes of coverage levels – which are observable, in contrast to reviews – we find some early evidence to suggest that coverage levels are adjusted more frequently in jurisdictions with higher levels of inflation.