Bank customers in the territory can look forward to better protection now that the long-promised Virgin Islands Deposit Insurance Corporation has been established, the Ministry of Finance announced last week.
The VIDIC, which held its first board meeting on Jan. 16, is designed to be the territory’s “financial safety net,” the ministry explained in a Jan. 24 statement.
“In the event of a bank’s failure, VIDIC helps to ensure that your hard-earned money is safe,” the ministry stated. “It’s a proactive measure to instil confidence and security in our banking system, providing peace of mind to every depositor.”
The board
Moving forward, the VIDIC board of directors will guide the body’s strategic direction, according to the ministry.
The board is chaired by Ian Smith. Other members are external director David Walker and directors Kenneth Baker, Sherri Ortiz-Fahie and Phillip Fahie.
“We believe that the establishment of the VIDIC marks a significant milestone in reinforcing the stability and security of our financial system,” Mr. Smith said.
Background
The corporation is a long time in coming.
Historically, the territory’s banks have not offered deposit protection to their customers.
But efforts to change that have been in the works for more than seven years.
In 2016, the House of Assembly passed the VI Deposit Insurance Act, which mandated the establishment of the VIDIC and the VI Deposit Insurance Fund to protect small depositors from losing their savings in the event of a bank failure via a regime similar to ones that exist in many other countries.
After the passage of the act, the Ministry of Finance worked on subsidiary legislation to support it, including creating a legal and resolution framework.
The Financial Services Commission Act, for instance, was amended to enable the FSC to conduct resolution proceedings against banks and other institutions in financial distress and to appoint a “rehabilitator” to direct the affairs of a struggling bank.