The Eurasia Regional Committee Annual Meeting and International Workshop will be hosted in Ulaanbaatar city

The International Deposit Insurers Association's (IADI) Euro-Asia Regional Committee will hold its annual meeting and an International Workshop titled "Implementing the Differential Premium System" at the Shangri-La Hotel in Ulaanbaatar from June 28-30. Attendees from 18 countries, totalling around 40 guests, will participate. In addition, member organizations of Mongolia's financial stability council, including the Ministry of Finance, the Bank of Mongolia, the Financial Regulatory Commission, the Deposit Insurance Corporation, as well as local and foreign entities cooperating with commercial banks and the Deposit Insurance Corporation, will be in attendance. The gathering is expected to bring together over 100 attendees.

Nations in Attendance at the Annual Meeting of the Euro-Asia Regional Committee and the International Workshop

Among 146 countries worldwide that have deposit insurance systems, 94 are principal members of the International Association of Deposit Insurers (IADI). Mongolia joined this influential group as the 72nd member in 2013. Members are grouped into eight regional divisions based on their geographical locations. The Deposit Insurance Corporation of Mongolia initially became a member of the Asia-Pacific regional committee in 2013, later joining the Euro-Asia regional committee in 2016.   

S. Baatarsuren, the current Acting CEO of the Deposit Insurance Corporation of Mongolia, was appointed as the committee's Chairperson during the Euro-Asia Regional Committee's meeting of the IADI in June 2022, a position he'll hold for a three-year term. As the committee's chairperson, Baatarsuren's main responsibilities include developing the regional deposit insurance system in line with regional interests, fostering experience sharing, addressing issues, and representing regional activity reports and plans to the IADI's Executive Council. He also addresses issues at the regional level.  Annual meetings and workshops are planned to address proposals and concerns, and to discuss regional strategic priorities and action plans. Consequently, the Deposit Insurance Corporation is spearheading this year's Euro-Asia Regional Committee of the IADI's annual meeting and the International Workshop on "Implementation of the Differential Premium System". This effort aims to learn from countries with advanced deposit insurance systems and integrate their successful practices into their operations.  

Globally, deposit insurance premiums are typically categorized into three types: flat rate, a risk-based differentiated premium rate, and a combined approach. In the case of Mongolia, for the past decade, deposit insurance premiums have been flat rated from its member banks.

According to the 2022 survey conducted by the International Association of Deposit Insurers, out of the 105 deposit insurance organizations assessed, 52 employ a flat rate system, 43 utilize a differentiated premium rate system, and 10 apply a combined premium system.

A risk-based differential premium system gauges the risk profile of a bank and sets premiums accordingly. In this setup, banks with higher risk profiles pay a higher percentage, while lower-risk banks pay less. This risk assessment and premium determination process encourages banks to minimize their risk exposure. Moreover, establishing a tiered system based on each bank's risk level promotes fairness and equality among banks with different risk levels, and further bolsters financial stability. In essence, levying higher premiums on banks with higher risk – those on the brink of liquidation and posing potential threats to financial stability – compared to their normally operating counterparts, enhances banking and financial discipline and reduces moral hazard. Recognizing these benefits, there's a growing trend towards adopting this system in the country. Consequently, Mongolia's Deposit Insurance Corporation is strategizing and gearing up to transition to a risk-based premium system.


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