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Depositor Protection in Australia

Author

Listed:
  • Grant Turner

    (Reserve Bank of Australia)

Abstract

Depositors in authorised deposit-taking institutions (ADIs) in Australia benefit from a number of layers of protection designed to ensure that their funds are safe. At the broadest level, Australia has a strong system of prudential regulation and supervision which, together with sound management at individual institutions, has meant that problems in ADIs have been rare. In addition, depositors benefit from strong protections in the unlikely event that an ADI fails. They have a priority claim on the assets of a failed ADI ahead of other unsecured creditors, known as ‘depositor preference’. Depositor protection arrangements were further strengthened in 2008 with the introduction of the Financial Claims Scheme (FCS), under which the Australian Government guarantees the timely repayment of deposits up to a predefined cap. This cap was temporarily set at $1 million per person per ADI when the FCS was introduced and is scheduled to be set on a permanent basis at $250 000 per person per ADI from 1 February 2012.

Suggested Citation

  • Grant Turner, 2011. "Depositor Protection in Australia," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 45-55, December.
    • Handle: RePEc:rba:rbabul:dec2011-05
    as

    Download full text from publisher

    File URL: https://www.rba.gov.au/publications/bulletin/2011/dec/pdf/bu-0911-5.pdf
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    Citations

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    Cited by:

    1. Kevin Davis, 2020. "Regulatory changes to bank liability structures: implications for deposit insurance design," Journal of Banking Regulation, Palgrave Macmillan, vol. 21(1), pages 95-106, March.
    2. Zan Fairweather & Denzil Fiebig & Adam Gorajek & Rochelle Guttmann & June Ma & Jack Mulqueeney, 2024. "Valuing Safety and Privacy in Retail Central Bank Digital Currency," RBA Research Discussion Papers rdp2024-02, Reserve Bank of Australia.
    3. Peter Docherty & Ron Bird & Timo Henckel & Gordon Menzies, 2016. "Australian prudential regulation before and after the global financial crisis," CAMA Working Papers 2016-49, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    4. Mr. Daniel C Hardy, 2013. "Bank Resolution Costs, Depositor Preference, and Asset Encumbrance," IMF Working Papers 2013/172, International Monetary Fund.

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