Malaysia: Government Deposit Guarantee

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, 459-472

Abstract: On October 16, 2008, following the collapse of Lehman Brothers and regional expansions of deposit insurance, Malaysia announced its Government Deposit Guarantee (GDG), an unlimited guarantee of deposits held at eligible institutions. Given the "soundness and strong capitalization" of the banking sector, the preemptive program was meant "to maintain the stability of the Malaysian financial system." Prior to the crisis, the Perbadanan Insurans Deposit Malaysia (PIDM), Malaysia's deposit-insurance agency, guaranteed up to MYR 60,000 (USD 17,291) per depositor per insured institution. The PIDM was tasked with administering the GDG. Under the GDG, the PIDM insured all ringgit and foreign-currency deposits. All domestic and locally incorporated foreign banks were eligible for the GDG, including commercial, Islamic, and investment banks and deposit-taking development financial institutions. The GDG insured instruments that the PIDM had not previously covered, such as foreign-currency deposits, and insured previously uninsured institutions, such as investment banks. To fund the GDG, the PIDM acted on behalf of the government, levying fees on participating institutions that were then remitted to the government. The GDG ended as scheduled on December 31, 2010. Ultimately, no claims were made on the GDG. The Malaysian government passed legislation in 2010 to expand its precrisis deposit-insurance scheme, which framed how Malaysian officials planned to exit the GDG.

Keywords: account guarantee; Global Financial Crisis; Government Deposit Guarantee; Malaysia (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:459-472

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 ().