Why shouldn the Australian government provide a lanket bank deposits guarantee scheme?
After all, you initially supported this! What we did, was to recommend that the guarantee be set at $100,000. And the idea is for a guarantee of that kind to provide comfort to smaller depositors – households small businesses – but not to be so large as to distort the financial and money markets. That is why deposit guarantees around the world are set at around that level. How does this guarantee distort financial and money markets? We’ve heard all about the mortgage funds and the cash management trusts and what happened when you don’t have the benefit of guarantees. But let me give you another example. Let’s say you’re a finance company that provides leasing finance for motor cars…GE. General Electric is one of the biggest companies in the world. How does it get the money to lend to you to buy a car? It raises what’s called commercial paper, in other words, it goes and borrows money from the market and it does it in big licks… millions of dollars. But what has happened, once the g
Related Questions
- I saw an announcement regarding the withdrawal of the Governments Guarantee Scheme for Large Deposits and Wholesale Funding. Can you explain what it all means and how it affects me?
- Why did the Australian Government introduce the Guarantee Scheme for Large Deposits and Wholesale Funding?
- Why shouldn the Australian government provide a lanket bank deposits guarantee scheme?
