Australia: Financial Claims Scheme

Ezekiel Vergara ()
Additional contact information
Ezekiel Vergara: YPFS, Yale School of Management, https://elischolar.library.yale.edu/journal-of-financial-crises/

Journal of Financial Crises, 2022, vol. 4, issue 2, 220-238

Abstract: Following the collapse of Lehman Brothers on September 15, 2008, the Australian government intervened in its own banking system, both to support domestic depositors and to keep its banking system competitive with those in countries whose regulators had already intervened. On October 12, 2008, the Australian government announced the Financial Claims Scheme (FCS) to insure bank depositors. The deposit guarantee automatically insured depositors at all authorized deposit-taking institutions and covered a range of deposit accounts. As initially announced, the FCS would provide a blanket guarantee to all depositors with no fee for participation. This blanket guarantee, however, prompted a migration of funds from managed funds and investment banks to deposit accounts. On October 24, 2008, the government formally announced that an unlimited deposit guarantee would remain available, but in two parts. The FCS would guarantee up to AUD 1 million (about USD 660,000) per person per authorized deposit-taking institution, free of charge. A separate program would guarantee larger deposits for a fee on a voluntary basis. Prior to the FCS, Australia did not have a deposit-insurance scheme. The Australian Prudential Regulation Authority (APRA) ran the program. The FCS covered deposits totaling AUD 650 billion in March 2009. During its crisis operations, no depositor claims were made on the FCS. The government originally said it would review the cap after three years. In December 2010, the Australian government said the FCS would be a permanent feature of the Australian financial system. In February 2012, it lowered the guarantee to AUD 250,000.

Keywords: account guarantee; Australia; ex-post deposit insurance; Financial Claims Scheme; Global Financial Crisis (search for similar items in EconPapers)
JEL-codes: G01 G28 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
https://elischolar.library.yale.edu/cgi/viewconten ... -of-financial-crises (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ysm:ypfsfc:v:4:y:2022:i:2:p:220-238

Access Statistics for this article

More articles in Journal of Financial Crises from Yale Program on Financial Stability (YPFS) Contact information at EDIRC.
Bibliographic data for series maintained by ().