Daily Telegraph: Scrap guarantees for savers' deposits to avoid banking crises, says think tank

CPS report “The Abolition of Deposit Insurance” by Andreas Wesemann was featured in the Daily Telegraph, Friday 15 January 2016. 

“Savers’ deposits should no longer be guaranteed by the Government, as this insurance has made the UK more prone to banking crises, a think tank has warned.

The Center for Policy Studies (CPS) said that after 40 years of “increasingly frequent, increasingly severe” banking crises, it was time to consider the abolition of deposit insurance, which guarantees the first £75,000 of each person’s combined savings at banks and building societies.

The CPS claimed in a new report that scrapping deposit protection would bring about “an end, in perpetuity, to the need for the state bail-outs of UK banks” and reduce the “moral hazard” it has produced.

Without the availability of a Government guarantee for their savings, consumers would “be required to become, more risk-aware in their choice of bank”.”

To read the full article, visit the Daily Telegraph website

Date Added: Sunday 17th January 2016