Editorial | Greater protection for bank deposits worth every penny for Hong Kong
- As Hong Kong continues to emerge from its post-Covid slump, proposed confidence-building measures in line with safety nets at a global level can only help
Confidence-building measures offering wider protection for depositors in the event of a bank failure have been proposed for Hong Kong.
Increasing coverage to HK$800,000 (US$102,000) per depositor seems to be a sensible move for a city focused on post-pandemic economic recovery.
Funded by the banks themselves, the scheme was launched in 2006 when it provided up to HK$100,000 in deposit protection. The level was raised to half a million dollars in 2011.
The Hong Kong Deposit Protection Board proposes a 60 per cent increase that would put the deposit-protection ceiling on the same level as that for depositors in Britain, Germany and Ireland.
It would surpass the mainland’s 500,000 yuan (HK$547,000) safety net and the S$75,000 (HK$443,000) provided in Singapore, but not be as high as the US$250,000 coverage in the United States.
A dozen years have passed since the board last adjusted the protection level. Much has changed for the industry in the interim, including the collapse of US lenders such as Silicon Valley Bank and First Republic Bank.
