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competitive depositor protection October 5, 2008

Posted by Bradley in : Uncategorized , trackback

Depositor protection has been a subject of controversy in the EU before now (for example, the negotiations which led to the adoption of the deposit guarantees directive). But no sooner had Peter Mandelson taken the helm of the Department for Business, Enterprise and Regulatory Reform (the “Voice for Business Across Government” – Better Regulation Department) (a very apt appointment, as he has direct, personal, experience of some of the causes of current financial market turmoil – misleading disclosures/non-disclosures to mortgage providers) than Germany announced that it was going to improve protections for depositors with German banks. It’s just not cricket.


1. howard - October 7, 2008

Do any depositor protections like FDIC or those in the EU protect against currency collapses? I ask because FDIC’s 100k protection or whatever it has been raised to seems like it wouldn’t really matter if the dollar crashed and 100k wouldn’t buy a cup of coffee. Maybe it’s a stupid question because if there was a serious currency collapse, there would probably be a reissuance of a new currency or the agencies that issued the insurance would probably fail along w/ the state…??

2. Bradley - October 7, 2008

I’m not aware of any deposit protection systems that protect against anything other than there risk of losing the value of the deposit – and until recently many schemes did not protect even 100% of that amount. We’re now seeing a move to protecting 100% of the amount of deposits up to higher values than were previously protected.

3. howard - October 8, 2008

Thank you.