The role of deposit insurance in building a safer financial system - speech by Paul Tucker

Speaking in London today, Paul Tucker – the Bank’s Deputy Governor for Financial Stability, a member of the Bank’s Financial Policy Committee (FPC) and Monetary Policy Committee (MPC), and Chair of the G20 Financial Stability Board’s Steering Group on Resolution - updates on the FSB’s progress in its work on resolving distressed financial institutions, and outlines how deposit insurance fits in to that endeavour.
Published on 25 October 2012

Paul Tucker underlines the key role played by deposit insurance in international efforts to build solid foundations for global finance, though he says the UK “has not been alone in learning the hard way that it is not enough simply to have a deposit insurance system”. He underlines the importance of public awareness and understanding, and notes that in the UK, deposit takers are being required by bank supervisors – with encouragement from the Bank of England – to advertise prominently the availability and terms of deposit insurance, “in every branch, on every ATM, on every key webpage”. Meanwhile, the UK’s Financial Services Compensation Scheme will ensure they can deliver rapid payout, ideally within 7 days. He states that the deposit insurance regime “has the potential to revolutionalise retail banking”, lowering barriers to entry. And in terms of who pays for this, “it isn't government and the taxpayer but the industry itself”.

PDFPress release

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