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Hong Kong plans to raise the maximum protection on bank deposits in a move designed to better shield people during times of severe stress.
The Hong Kong Monetary Authority (HKMA) proposed to
increase the amount of savings covered by the government guarantee in the event of
bank failure to HK$800,000 ($102,272) per depositor at each Hong Kong bank, up from HK$500,000, a consultation paper showed. Changes to the scheme, which covers both individuals and corporate account holders, are expected to take effect from the start of 2025.
This review will “ensure the scheme remains effective in maintaining banking stability and to keep up with international best practice,†said Daryl Ho, Hong Kong Deposit Protection Board CEO and the executive director at the HKMA.
Recent US bank failures reignited a debate around the world on savers’ protections, schemes where governments guarantee to pay depositors in the rare event of a bank collapsing. While the majority of large countries offer such a backstop, the demise of Silicon Valley Bank indicated a shortfall in the depositor protection program for smaller institutions.
Hong Kong is attempting a revival from years-long Covid restrictions that saw talent
and capital leave. The domestic economy and its stock market are showing scant signs of a recovery six months after borders reopened.