AFI has formed partnerships with 10 deposit insurance agencies to advance peer learning on deposit insurance for electronic money (e-money) products, expanding existing ties with international standard-setting bodies (SSB).

Under the agreements, technical advisers will assist AFI’s Global Standards Proportionality Working Group (GSPWG) on the protection of customer funds held in e-money accounts and the analysis of effective deposit insurance systems for financial inclusion.

“This is an exciting step for the AFI network that will help ensure the most vulnerable consumers are protected when using e-money wallets and other electronic payment services,” AFI Executive Director Dr. Alfred Hannig said.

It builds on AFI’s partnership with the International Association of Deposit Insurers (IADI), which began in 2015 to exchange information on activities to help policymakers strengthen the effectiveness of deposit insurance arrangements.

“The collaboration with AFI will enrich our understanding of issues and challenges in protecting e-money product holders and will be beneficial to the IADI members,” IADI Secretary General David Walker said.

E-money services are increasingly popular among consumers, including those with access to bank accounts, resulting in a wave of non-banks – such as technology platforms, prepaid card issuers and mobile network operators – offering electronic payment facilities. In AFI’s main host country of Malaysia, for example, only five e-money issuers are banks compared with 41 non-banks.

The growing global trend raises concerns that customer funds held in e-money products may lack the guarantees or regulatory stringency that deposit insurance provides to individuals in the event of an institution’s bankruptcy.

AFI will be supported by technical advisers from deposit insurers in Colombia, Kenya, Mexico, Morocco, Nigeria, Peru, Philippines, South Korea, the United States and the West African Economic and Monetary Union (WAEMU). WAEMU is a coalition of eight members countries, namely, Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo.

All 10 are members of the IADI, a global SSB that promotes financial stability by providing forums and training on matters related to deposit insurance.

Among the expected outcomes of the partnerships will be the development of knowledge products that outline the key elements of deposit insurance systems, their role in promoting financial inclusion and the options available to policymakers for deposit insurance treatment of e-money.