Document Type

Case Study

Case Series

Account Guarantee Programs

JEL Codes

G01, G28


Following the collapse of Lehman Brothers on September 15, 2008, the Australian government intervened in its own banking system, both to support domestic depositors and to keep its banking system competitive with those in countries whose regulators had already intervened. On October 12, 2008, the Australian government announced the Financial Claims Scheme (FCS) to insure bank depositors. The deposit guarantee automatically insured depositors at all authorized deposit-taking institutions and covered a range of deposit accounts. As initially announced, the FCS would provide a blanket guarantee to all depositors with no fee for participation. This blanket guarantee, however, prompted a migration of funds from managed funds and investment banks to deposit accounts. On October 24, 2008, the government formally announced that an unlimited deposit guarantee would remain available, but in two parts. The FCS would guarantee up to AUD 1 million (about USD 660,000) per person per authorized deposit-taking institution, free of charge. A separate program would guarantee larger deposits for a fee on a voluntary basis. Prior to the FCS, Australia did not have a deposit-insurance scheme. The Australian Prudential Regulation Authority (APRA) ran the program. The FCS covered deposits totaling AUD 650 billion in March 2009. During its crisis operations, no depositor claims were made on the FCS. The government originally said it would review the cap after three years. In December 2010, the Australian government said the FCS would be a permanent feature of the Australian financial system. In February 2012, it lowered the guarantee to AUD 250,000.

Date Revised