Taxpayer deposit guarantee discussed last year
(5 October 2012 – Australia) Details of top banking regulators’ push for a bank levy have been released after a freedom-of-information request from the Australian Financial Review.
In the documents, senior officials from the Reserve Bank of Australia (RBA), Treasury and the Australian Prudential Regulation Authority (APRA) last year discussed the pros and cons of levying an annual fee in exchange for the Financial Claims Scheme - Canberra's guarantee of bank deposits.
The banking regulators urged the federal government to consider charging banks a fee in exchange for the taxpayer guarantee on deposits, in a move that could have raised up to A$38 billion over 25 years, the previously secret documents show.
The deposit scheme, introduced during the global financial crisis, guarantees all deposits worth up to A$250,000. But unlike similar programs overseas, banks and savers are not required to pay for the safety net.
Instead of introducing a levy, federal Labor opted for a scheme whereby the government would cover the cost of reimbursing all deposits worth up to A$250,000 if a bank collapsed.
This money would then be recovered from the collapsed bank's assets, and there would be scope to introduce a tax on the financial system to cover any further costs.
The banking regulators urged the federal government to consider charging banks a fee in exchange for the taxpayer guarantee on deposits, in a move that could have raised up to A$38 billion over 25 years, the previously secret documents show.
The deposit scheme, introduced during the global financial crisis, guarantees all deposits worth up to A$250,000. But unlike similar programs overseas, banks and savers are not required to pay for the safety net.
Instead of introducing a levy, federal Labor opted for a scheme whereby the government would cover the cost of reimbursing all deposits worth up to A$250,000 if a bank collapsed.
This money would then be recovered from the collapsed bank's assets, and there would be scope to introduce a tax on the financial system to cover any further costs.
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