Tag Archives: Deposit insurance

The Federal Council aims at strengthening the deposit insurance system and has asked the ministry of finance to work out new rules. Banks will have to pledge securities as collateral, rather than solely contribute cash ex post. The council rejects the proposal to prefund a deposit fund.

On VoxEU, Charles Calomiris and Matthew Jaremski discuss the origins of bank liability insurance. They argue that it is redistribution, not the aim to boost efficiency, which explains a lot of the action. … there are two theoretical approaches to explaining the creation and expansion of deposit insurance. The first is an economic approach grounded in potential efficiency gains from limiting bank runs (i.e. the public interest motivation). The second is a political approach grounded in the...