A scheme designed to protect bank customers’ deposits has a new target date of 2022, as a consultant hired last year continues work on subsidiary legislation to the Virgin Islands Deposit Insurance Act 2016 Amid the challenges of the Covid-19 pandemic, Prime Minister Andrew Fahie said last Thursday in the House of Assembly in response to a question from opposition MP Mitch Turnbull (R-D2).

In 2016, the HOA passed the Deposit Insurance Act, which provides for the establishment of the VI Deposit Insurance Corporation and a deposit insurance fund to protect small depositors from the loss of their savings in the event of bankruptcy, through a regime similar to those that exist in many other countries.

Since the adoption of the law, the Ministry of Finance has started to work on subsidiary legislation to support it.

In February 2020, Mr Fahie announced that the government had signed an undisclosed contract with US consultant Vilma Rosa Leon-York to help create a legal and resolution framework for VIDI Corporation.

Ms. Leon-York has been a consultant to the US Department of the Treasury for 10 years and has helped design similar deposit insurance systems in countries like El Salvador, Thailand and Tunisia, according to her LinkedIn account.

Target dates

At an HOA meeting when he announced the board, Mr. Fahie said he expects the company to go live by Jan. 1, 2021, explaining that the work is expected to take “approximately 928. hours, or 24 weeks, to be completed. over a period of one year. “

Last Thursday, he said the government was now at “advanced stages of this work”, with a target completion date midway through the second quarter of this year.

He added that the government is on the verge of creating the VIDI Corporation “with a target date of early 2022”.

Ms Leon-York has already drafted subsidiary legislation covering five legal areas of the law, as well as the necessary changes to designate VIDIC as the deposit insurance and resolution authority in other laws, including the Law on Financial Services Commission, the Banking and Trust Companies Act, and the Insolvency Act, the premier said.

Beneficiaries

Announcing the council in 2020, the prime minister said the insurance scheme would enhance consumer confidence and stability, especially for the benefit of consumers “who are unable to assess the institution’s risks in where they can invest their hard-earned savings.

He added that the system would also prevent bank breaks that could destabilize the territory’s monetary system and allow a stable legal regime to help the government deal with “problem financial institutions.”

The new regime, he explained, would meet international requirements and respond to recommendations made in the 2009 Michael Foot report, which concerned international financial centers, and the International Monetary Fund‘s assessment of global financial centers in 2010. .

In addition to employing Ms Leon-York, Mr Fahie said last year that the government will convene a board to oversee the functions of VIDI Corporation, although he did not specify when or how board members would be. selected.

In 2016, the government also negotiated with the banks the amount of premiums they would pay under the program. Although member institutions must provide the majority of funds, taxpayers are required by law to contribute an initial amount of $ 4 million. In his statement last Thursday, the Prime Minister did not say whether the $ 4 million had yet been spent.