ContextAddress to the Annual Conference of the International Association of Deposit Insurers, hosted by German bank protection schemes; the BIS fosters central bank cooperation, and its main challenge is new risk sources.
Why it mattersIt asks whether deposit insurance and crisis tools built for banks can handle stablecoins and other new risks, a live question for regulators.
- Crisis frameworks were built for bank solvency and liquidity stress and may miss new sources of risk.
- Bank deposits fund the economy but are prone to runs because of maturity and risk transformation.
- Rules for stablecoins and other crypto assets still have material gaps in implementation.
- Review crisis management frameworks and add measures for new types of risk.
- Study how stress spreads to regulated institutions and which containment tools could limit it.
- Strengthen cooperation among supervisors, resolution authorities, central banks and deposit insurers.
Read the speech summary
1. What deposit insurers do today
Speaking in Berlin to the international association of deposit insurers, Pablo Hernández de Cos recalls that the purpose of insurance is to protect less sophisticated savers and sustain public confidence, though a state backstop or central bank liquidity could also do part of that job. Industry funding remains central because it spreads failure costs among banks, and the old worry that insured banks take more risk has been answered by capital rules and resolution regimes that put losses on owners and creditors. Mandates have widened: over 80% of members now play some role in resolution that keeps deposits accessible rather than only paying out.
2. Funding failures
Banks' own loss-absorbing resources should be the first line, as international standards require for the largest banks. But resolution costs are unpredictable, loss-absorbing buffers can be depleted before failure and they do not suit every business model, notably smaller banks. Industry-funded schemes therefore stay vital, as the recent European reform widening their use in resolving small banks illustrates.
3. Three sources of new risk
Crisis tools were built around bank solvency and liquidity stress, so he sketches three areas to review. Risks can arise outside the regulated perimeter, as shown by the Archegos collapse and the 2022 UK gilt disruption, which calls for understanding how stress spreads and possibly access to central bank liquidity for some non-banks under proper oversight. Technology makes runs faster, as the Silicon Valley Bank failure showed, and raises the odds of severe cyber or third-party outages for which authorities need a joined-up plan. Finally, new forms of money could matter if adopted widely.
4. Stablecoins and tokenised deposits
Protection exists because deposits fund credit and carry run risk, and because they are redeemable at par and dominate payments. Asset-backed stablecoins lack stable value and the credit link, so the core rationale is missing; yet a run could force fire sales and bank withdrawals, so safeguards on reserves, capital and holders' legal claims matter, and a 2025 review found major implementation gaps. Tokenised deposits stay tied to a bank and credit provision, so logically they should receive the same protection. Whatever is decided must be explained clearly to avoid public confusion, a task where deposit insurers have proven skills in raising awareness.
5. Conclusion
Over a quarter century deposit insurance has become a core part of the safety net and is moving closer to failure management. Because technology is advancing fast, crisis frameworks must change to handle new risks. Yet proven success against contagion does not mean every product with deposit-like features deserves cover; extension should depend on whether the product delivers a comparable benefit to society. The association has already updated its core principles and published work on digital products, business models and players, which should feed the day's discussions.