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Full-Text Articles in Economic Policy
Taiwan (Roc): Central Deposit Insurance Corporation, Lily S. Engbith
Taiwan (Roc): Central Deposit Insurance Corporation, Lily S. Engbith
Journal of Financial Crises
In September 2008, the failure of a large Taiwanese bank led depositors to shift billions of dollars from private banks to state-owned banks. To stem the runs, the government on October 7 invoked its authority under Articles 28 and 29 of the Deposit Insurance Act to announce a temporary, unlimited guarantee on all deposit accounts of institutions covered by the Central Deposit Insurance Corporation (CDIC). In addition to removing the previous TWD 3 million (USD 90,000) cap per depositor, the expanded coverage included several types of deposit accounts that had not been previously insured by the CDIC. As the CDIC’s …
United Kingdom: Financial Services Compensation Scheme, Ezekiel Vergara
United Kingdom: Financial Services Compensation Scheme, Ezekiel Vergara
Journal of Financial Crises
In mid-September 2007, as credit markets froze, Northern Rock, the United Kingdom’s fifth-largest mortgage bank, struggled to secure short-term funding and sought emergency liquidity assistance from the Bank of England (BoE). As word of that support leaked to the public, the bank suffered a run by its retail depositors. On September 17, Her Majesty’s Treasury (HMT) announced it would guarantee all of Northern Rock’s deposits. On October 1, 2007, the Financial Services Authority (FSA), then the UK’s lead financial regulator, announced that the UK’s deposit insurer would abolish co-insurance and cover 100% of eligible accounts, up to GBP 35,000 (USD …
Spain: Deposit Guarantee Funds, Ezekiel Vergara
Spain: Deposit Guarantee Funds, Ezekiel Vergara
Journal of Financial Crises
On October 10, 2008, Spanish authorities increased the amount insured under its three Fondos de Garantía de Depósitos (FGDs), Spain’s deposit-insurance schemes, from EUR 20,000 to EUR 100,000 (USD 27,200 to USD 136,000). By raising this limit, which was meant to be a permanent change to the banking system, Spanish authorities intended to bolster depositor confidence while exceeding a recent European Union (EU) recommendation to expand such coverage to at least EUR 50,000. Membership in one of the FGDs was compulsory for banks, cajas (savings banks), and cooperatives, each of which had a separate fund. These institutions paid a 0.2% …
Swiss Banks’ And Securities Dealers’ Depositor Protection Association, Ezekiel Vergara
Swiss Banks’ And Securities Dealers’ Depositor Protection Association, Ezekiel Vergara
Journal of Financial Crises
During the Global Financial Crisis (GFC), Swiss authorities adopted changes to their deposit-insurance system, partly in response to similar measures by neighboring countries. On November 5, 2008, the Swiss finance minister announced that Switzerland would propose legislation to increase depositor coverage from CHF 30,000 to CHF 100,000 (USD 85,400). Swiss authorities also increased the maximum amount of ex-post contributions they could levy from CHF 4 billion to CHF 6 billion. The Swiss Banks’ and Securities Dealers’ Depositor Protection Association (ESI), Switzerland’s standing deposit-insurance body, administered its federal deposit-insurance system. The ESI was privately administered, was compulsory for nearly all deposit-taking …
Singapore: Government Guarantee On Deposits, Ezekiel Vergara
Singapore: Government Guarantee On Deposits, Ezekiel Vergara
Journal of Financial Crises
On October 16, 2008, following the collapse of Lehman Brothers on September 15 and the introduction of Hong Kong’s unlimited deposit guarantee on October 14, Singapore announced its Government Guarantee on Deposits (GGD). The GGD was meant “to avoid an erosion of banks’ deposit base and ensure a level international playing field for banks in Singapore.” It was administered by the Monetary Authority of Singapore (MAS), Singapore’s central bank and financial regulatory body, and was backed by government reserves totaling SGD 150 billion (about USD 100 billion). The program expanded upon Singapore’s pre-crisis guarantee of SGD 20,000, which was administered …
Romania: Bank Deposit Guarantee Fund, Ezekiel Vergara
Romania: Bank Deposit Guarantee Fund, Ezekiel Vergara
Journal of Financial Crises
Following international calls to strengthen deposit-insurance systems during the Global Financial Crisis (GFC), Romanian authorities increased their deposit-insurance coverage from EUR 20,000 to EUR 50,000 (USD 26,800 to USD 67,000) on October 14, 2008, with the change coming into effect the next day. The Fondul de Garantare a Depozitelor Bancare (FGDB), Romania’s existing deposit insurer, implemented it. Membership was mandatory for all banks registered with the National Bank of Romania (NBR), and local branches of foreign banks could apply for supplementary coverage if their home coverage was below EUR 50,000. The FGDB covered most deposit accounts and charged participating institutions …
Portugal: Deposit Guarantee Fund, Kaleb B. Nygaard
Portugal: Deposit Guarantee Fund, Kaleb B. Nygaard
Journal of Financial Crises
On November 3, 2008, the Portuguese government, through a formal legal decree, increased the country’s deposit insurance coverage from EUR 25,000 to EUR 100,000 (USD 31,750 to USD 127,000). The decree came in response to the Global Financial Crisis and a European Union recommendation that all member states increase their deposit coverage to at least EUR 50,000. Portugal’s deposit-guarantee fund, the Fundo de Garantia de Depósitos (or FGD in Portuguese), had existed since 1992. In 2010, the fund was called upon to cover approximately EUR 100 million in deposits of the failed commercial bank Banco Privado Português, S.A., which had …
Philippine Deposit Insurance Corporation, Lily S. Engbith
Philippine Deposit Insurance Corporation, Lily S. Engbith
Journal of Financial Crises
At the height of the Global Financial Crisis in October 2008, moves by other countries to expand the scope of their bank deposit insurance led the Philippine government to consider similar measures. Unlike most countries, however, the government did not make the changes immediately. After a lengthy legislative process, the President signed a bill on April 29, 2009, doubling the Philippine Deposit Insurance Corporation’s (PDIC’s) coverage from PHP 250,000 to PHP 500,000 (about USD 5,300 to USD 10,600) per depositor, with any losses in excess of PHP 250,000 covered by the national government. The changes took effect on June 1, …
New Zealand: Crown Retail Deposit Guarantee Scheme, Ezekiel Vergara
New Zealand: Crown Retail Deposit Guarantee Scheme, Ezekiel Vergara
Journal of Financial Crises
The collapse of Lehman Brothers in 2008 led to a global financial crisis. Leaders of the G-7 countries agreed on October 10, 2008, to five principles for addressing the crisis, including the need for sound deposit insurance. On October 12, Australia’s prime minister announced a deposit insurance program that his government had first publicly vetted in June. Anticipating Australia’s announcement, New Zealand’s prime minister announced its own deposit guarantee scheme on the same afternoon. The government launched the Crown Retail Deposit Guarantee Scheme (the Scheme) “to ensure ongoing retail depositor confidence in New Zealand’s financial system, given turbulence in the …
Indonesia Deposit Insurance Corporation, Lily S. Engbith
Indonesia Deposit Insurance Corporation, Lily S. Engbith
Journal of Financial Crises
To address the risk of capital flight to neighboring countries during the Global Financial Crisis, the Indonesian government raised the limit on insured deposits 20-fold from IDR 100 million to IDR 2 billion per account (about USD 200,000). The President issued two government regulations on October 13, 2008. The first was an emergency decree that authorized the government, in consultation with the Indonesian Parliament, to alter the limit in times of systemic financial distress. The second was a government regulation enacting the actual increase, which has remained in effect since the crisis. All banks operating within Indonesia, including branches of …
Greece: Hellenic Deposit Guarantee Fund, Lily S. Engbith
Greece: Hellenic Deposit Guarantee Fund, Lily S. Engbith
Journal of Financial Crises
Responding to general financial and economic volatility during the Global Financial Crisis (GFC), the Greek government in November 2008 sought to shore up public confidence in the banking system by raising the deposit-insurance limit from EUR 20,000 to EUR 100,000 (127,000 USD) per depositor for three years. The Hellenic Deposit Guarantee Fund (HDGF) was responsible for administering this adjustment, which was accompanied by a fivefold increase in the percentages used for calculating member institutions’ annual contributions. All credit institutions that were authorized to operate in Greece, including branches of foreign banks without their own coverage, were required to participate in …
France: Deposit Guarantee Fund, Ezekiel Vergara
France: Deposit Guarantee Fund, Ezekiel Vergara
Journal of Financial Crises
In October 2008, during the Global Financial Crisis (GFC), European Union (EU) officials urged member states to raise their minimum deposit-insurance coverage to at least EUR 50,000 (USD 68,000) to promote confidence in banks. France did not need to increase its deposit-insurance cap to meet this target, as it already guaranteed EUR 70,000. The following year, EU officials passed a directive that required all member states to permanently increase their minimum deposit-insurance coverage to EUR 100,000 by December 31, 2010. French authorities complied with the EU’s directive on September 29, 2010. The Fonds de Garantie des Dépôts (FGD), a private …
Brazil: Time Deposits With Special Guarantee, Sharon M. Nunn
Brazil: Time Deposits With Special Guarantee, Sharon M. Nunn
Journal of Financial Crises
Uncertainty from the Global Financial Crisis spread to the Brazilian financial system in 2008, triggering a flight to quality toward assets with explicit or implicit government guarantees. In the Brazilian context, this meant depositors pulled funds from small and medium-size banks and parked them in larger banks that investors believed the government was more likely to backstop. The National Monetary Council (CMN) created the Time Deposits with Special Guarantee program (DPGE) in March 2009 to bolster liquidity in small and medium-size banks. The CMN put the country’s existing deposit insurer, the Credit Guarantee Fund (FGC), in charge of administering the …