The Importance of Bank Deposit Protection

The Importance of Bank Deposit Protection

January Carmalt

20 years: Research & banking

In this video, January explores the systemic importance of deposits and how they differ from other financial assets, as well as the seismic shift in treatment by regulators since 2008, both in theory and practice.

In this video, January explores the systemic importance of deposits and how they differ from other financial assets, as well as the seismic shift in treatment by regulators since 2008, both in theory and practice.

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The Importance of Bank Deposit Protection

8 mins 58 secs

Overview

When we open a savings or direct deposit account we do so with no fear of losing our money. It’s a circle of trust, an unspoken contract between us as depositors, or creditors, and the bank, as borrowers. We trust banks to safeguard our money, and banks trust depositors to provide them with the necessary ‘sticky’ funding to continue lending and remain liquid and operational. However, since the financial crisis of 2008, in an effort to privatise losses with ‘bail-in’ capital, regulators and governments around the globe explored options that risk putting senior deposit holders in direct line of suffering potential losses. This represented a sea change in banking regulation.

Key learning objectives:

  • Why are deposits important for a bank?

  • What are the FSCS and other deposit insurance schemes and why are they important?

  • What is ‘bail-in’ capital and how does this affect depositors?

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Summary
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Expert
January Carmalt

January Carmalt

January began her career in 1999 with Bank of America in Charlotte, NC. From the Credit Products team, she moved into fixed income bond research covering Telecoms and Financials. While in London, January focused on financial institutions bond research until her Director and head bond analyst role at Deutsche Bank. As of 2011, January has worked as a freelance writer.

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