Australia to Remove Bank Deposit Guarantee

Australia will remove its guarantees of commercial banks' wholesale funding and large deposits and of state government borrowing, after the Council of Financial Regulators recommends that the guarantees are no longer needed due to a stronger financial system.

 

The Wall Street Journal reports that the guarantee scheme for large deposits and wholesale funding will end March 31, while the the guarantee of state bonds to new issuance will be closed on Dec. 31. The newspaper notes that existing guaranteed bonds will continue to be covered until they mature or are terminated by the issuer.

 

"Our regulators explicitly advise that removing the guarantee will not materially affect banking-sector funding costs," says Treasurer Wayne Swan in a statement obtained by the Journal.

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