Rationale for $75,000 Threshold Amount in Deposit Insurance Scheme

Debated in Parliament on 9 May 2023.

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The government explains that the $75,000 deposit insurance limit balances the need for adequate depositor protection with maintaining a sustainable and credible scheme for the banking sector.
The limit is calibrated to protect most small depositors, as it covers the majority of accounts in local member banks, while avoiding excessive risk exposure and cost to the financial system.
The $75,000 threshold is reviewed periodically against benchmarks in other jurisdictions, but differences arise due to variations in economic conditions, bank risk profiles, and deposit concentration.
While per capita incomes have risen, the review considers broader factors including deposit distribution, banking system stability, and potential moral hazard, rather than income levels alone.
The government confirms that the deposit insurance cap is subject to ongoing reviews to ensure it remains appropriate, with a formal assessment announced for future adjustments.

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Assoc Prof Jamus Jerome Lim

Assoc Prof Jamus Jerome Lim asked the Prime Minister (a) what are the considerations behind the decision to insure deposits in local member banks at the amount of $75,000 under the Deposit Insurance Scheme, compared to higher amounts in other jurisdictions; and (b) whether this limit will be reviewed in light of higher per capita incomes.

Tharman Shanmugaratnam (for the Prime Minister)

This Question has been answered in the reply to Question Nos 12 and 13 for Oral Answer on the Order Paper for 8 May 2023. [Please refer to "Proposal to Review Cap of Coverage Per Depositor under Deposit Insurance", Official Report, 8 May 2023, Vol 95, Issue 102, Oral Answers to Questions section.]

Summary written by AI (learn more)

The government explains that the $75,000 deposit insurance limit balances the need for adequate depositor protection with maintaining a sustainable and credible scheme for the banking sector.
The limit is calibrated to protect most small depositors, as it covers the majority of accounts in local member banks, while avoiding excessive risk exposure and cost to the financial system.
The $75,000 threshold is reviewed periodically against benchmarks in other jurisdictions, but differences arise due to variations in economic conditions, bank risk profiles, and deposit concentration.
While per capita incomes have risen, the review considers broader factors including deposit distribution, banking system stability, and potential moral hazard, rather than income levels alone.
The government confirms that the deposit insurance cap is subject to ongoing reviews to ensure it remains appropriate, with a formal assessment announced for future adjustments.

Questions identified by AI (learn more)

Rationale for $75,000 Threshold Amount in Deposit Insurance Scheme | PAPERCUTS

Rationale for $75,000 Threshold Amount in Deposit Insurance Scheme

Debated in Parliament on 9 May 2023.

Summary written by AI (learn more)

The government explains that the $75,000 deposit insurance limit balances the need for adequate depositor protection with maintaining a sustainable and credible scheme for the banking sector.
The limit is calibrated to protect most small depositors, as it covers the majority of accounts in local member banks, while avoiding excessive risk exposure and cost to the financial system.
The $75,000 threshold is reviewed periodically against benchmarks in other jurisdictions, but differences arise due to variations in economic conditions, bank risk profiles, and deposit concentration.
While per capita incomes have risen, the review considers broader factors including deposit distribution, banking system stability, and potential moral hazard, rather than income levels alone.
The government confirms that the deposit insurance cap is subject to ongoing reviews to ensure it remains appropriate, with a formal assessment announced for future adjustments.

Questions identified by AI (learn more)

Full Transcript

Assoc Prof Jamus Jerome Lim

Tharman Shanmugaratnam (for the Prime Minister)

Summary written by AI (learn more)

The government explains that the $75,000 deposit insurance limit balances the need for adequate depositor protection with maintaining a sustainable and credible scheme for the banking sector.
The limit is calibrated to protect most small depositors, as it covers the majority of accounts in local member banks, while avoiding excessive risk exposure and cost to the financial system.
The $75,000 threshold is reviewed periodically against benchmarks in other jurisdictions, but differences arise due to variations in economic conditions, bank risk profiles, and deposit concentration.
While per capita incomes have risen, the review considers broader factors including deposit distribution, banking system stability, and potential moral hazard, rather than income levels alone.
The government confirms that the deposit insurance cap is subject to ongoing reviews to ensure it remains appropriate, with a formal assessment announced for future adjustments.

Questions identified by AI (learn more)

Rationale for $75,000 Threshold Amount in Deposit Insurance Scheme

Summary

Questions Identified

Full Transcript

Assoc Prof Jamus Jerome Lim

Tharman Shanmugaratnam (for the Prime Minister)

Summary

Questions Identified

Rationale for $75,000 Threshold Amount in Deposit Insurance Scheme

Summary

Questions Identified

Full Transcript

Assoc Prof Jamus Jerome Lim

Tharman Shanmugaratnam (for the Prime Minister)

Summary

Questions Identified