Australia Guarantees Fixed Deposits
On 12 October 2008, the Australian Government announced guarantee arrangements for deposits and wholesale funding of eligible authorised deposit-taking institutions (ADIs).
The arrangements are designed to promote financial system stability in Australia, by supporting confidence and assisting ADIs to continue to access funding at a time of considerable turbulence. They are also designed to ensure that Australian institutions are not placed at a disadvantage compared to their international competitors that can access similar government guarantees on bank debt.
The Australian Government Guarantee Scheme for Large Deposits and Wholesale Funding (the Guarantee Scheme) formally commenced on 28 November 2008. Interim arrangements applied until that date, with deposits and eligible wholesale borrowing guaranteed without charge in this period.
Under the Guarantee Scheme, eligible ADIs can obtain guarantees for deposit balances totalling over $1 million per customer and for wholesale funding liabilities. Access to the Guarantee Scheme is voluntary. Separate arrangements apply for deposit balances totalling up to and including $1 million per customer per institution. Such deposits are guaranteed by the Australian Government under the Financial Claims Scheme and this guarantee is free.
Eligible institutions wanting to access the guarantee for their large deposit balances or wholesale funding from 28 November 2008 need to apply to the Scheme Administrator. Information on the guarantee is set out in the Deed of Guarantee. Information for institutions on eligibility, how to apply and reporting arrangements is in the Scheme Rules, Application Documentation and Reporting Requirements.
Source: Reserve Bank of Australia
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