Australia's Implicit Deposit Insurance — Should It Be Reconsidered?


  • Robert P. Gray

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      Robert P. Gray is in the Discipline of Accounting and Business Law, University of Sydney. The author acknowledges the assistance of Professor Graeme Dean of the University of Sydney and Emeritus Professor Frank Clarke of the University of Newcastle in reviewing this research and offering suggestions for improvement. He also acknowledges the helpful suggestions given during a Research Seminar sponsored by the Accounting Foundation of the University of Sydney, the 14th Annual Australasian Finance and Banking Conference at the University of New South Wales and two anonymous referees.


Most major developed countries have bank deposit insurance; the European Parliament recently mandated it for all member countries. One of the characteristics of most deposit insurance schemes to protect depositors is that the banking industry funds the scheme through assessments. Interestingly, Australia does not have explicit deposit insurance and to date there has been little public debate on this subject. This paper proposes that such a debate should be initiated.