Tue, Feb 10, 2009 - Page 12 News List

FSC studying plan to extend blanket deposit guarantee

STAFF WRITER

The Financial Supervisory Commission (FSC) may extend the deadline of its blanket deposit guarantee to the end of next year in a bid to stabilize the markets, the Chinese-language Commercial Times reported yesterday.

The proposal, which recommends that the commission extend its blanket deposit guarantee until the end of next year, was submitted by bank executives during their meetings with commission chairman Sean Chen (陳冲) prior to the Lunar New Year holiday, the report said.

Citing an unidentified official, the report said the commission began to study the feasibility of the proposal on Sunday and is expected to come up with a final decision by June at the latest.

The official said the commission is in discussions with the Central Deposit Insurance Corp after learning that most Asian governments, including Hong Kong, Singapore, Malaysia and Thailand, “are providing a blanket guarantee for two years until the end of next year.”

He added that many European countries have set no specific deadlines for their blanket deposit guarantees, with their financial regulators closely watching the future development of the financial markets.

He also said that the commission would weigh up the potential impact on the banking system of clients of small and medium-sized banks who may rush to transfer their deposits to larger banks in the second half of this year before the guarantee expires.

Nevertheless, the local financial market is in no immediate danger of collapsing, the official said, even though the government announced the blanket guarantee on all bank deposits in October.

The commission said it would also discuss the proposal with the central bank before submitting a plan to the Cabinet for approval.

If the deadline is not extended, the government would revert to guaranteeing deposits of up to NT$1.5 million next year.

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