the Core Principles for Effective Deposit Insurance System has been created by the BCBS and the IADI in June 2009.  

“A deposit insurance system clarifies the authority’s obligations to depositors (or if it is a private system, its members), limits the scope for discretionary decisions, can promote public confidence, helps to contain the costs of resolving failed banks and can provide countries with an orderly process for dealing with bank failures and a mechanism for banks to fund the cost of failures.” The system is able to promise that the savings can be repaid to the depositor. It is clear that an effective deposit insurance system is favourable to the failure banks and it can protect the interest of depositors and the financial market as well. Hence the BCBS and the IADI set up 18 core principles for the improvement of the current deposit insurance system. However, this essay will concentrate on four of them which are public policy objectives, governance, relationships with other safety-net participants and the effective resolution processes and analyze the performance of them during the recent financial crunch.