West Bank and Gaza: Promoting financial stability through the establishment of a Deposit Insurance Scheme

This project’s objective was to make recommendations on the legal design of a deposit insurance framework and a plan for its implementation.The mission focused primarily on the general legal issues for the design and implementation of an adequate deposit insurance system. The project was phased, with a view to proposing the most important steps to be followed to achieve an operational infrastructure.

A key component to promote the success of this legal project was to ensure that it included a review for the pre-conditions for effective deposit insurance at the outset. Consequently, it directly addressed impediments posed by pre-conditions as part of the project implementation, and incorporated policy dialogue and developed an effective public awareness strategy as part of the legal implementation. Authorities complimented the quick delivery of the project, which enabled the World Bank to draft the terms of reference for the larger undertaking to draft the deposit insurance law. Thus, the new deposit insurance framework has become an intermediate output toward promoting two national overarching objectives: financial stability and expanded economic activity.

The projects comprehensive action plan increased the likelihood of maintaining momentum toward its implementation. The authorities are hoping that broader deposit insurance coverage becomes a vehicle for financial inclusion.

The project also has the added benefit of being part of a phased set of interventions, leading directly to the World Bank preparing a project on the drafting of the DIS law and regime. The design of the DIS has catalyzed other donor TA to provide capacity building and training.