Regulators should be upfront with taxpayers – and admit all deposits are guaranteed  

The Bank of England’s recent decision to raise the limit on its deposit guarantee raises questions about the point of these limits. As governments have, in the event, pledged to protect all bank deposits when even small banks face runs, it may be more honest and effective to say that all deposits are guaranteed, while charging banks appropriately via the deposit guarantee funds. This is a guest article by Simon Samuels, founder of Veritum Partners.

Photo: Getty

Many in the UK will remember the scenes on television the morning of Friday, September 14, 2007. Savers were forming typically orderly British queues outside branches of Northern Rock bank, following news leaked the previous evening that the bank had received emergency funding from the Bank of England.  

Whilst the then governor Mervyn King and Chancellor Alistair Darling took to the media channels seeking to reassure depositors that their money was safe, in fact it wasn’t.

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