In the current crisis, the expansion of the coverage of deposit insurance indeed had effects of stabilizing depositors’ behaviors to some extent. Moreover, central banks have been trying to stabilize global financial markets by making extraordinary arrangements to provide liquidity to the markets in the U.S. dollar together with their own currencies.
Through those measures, the funding conditions of U.S. and European financial institutions have been eased to some extent, compared with the situation immediately after the collapse of Lehman Brothers. However, as each government decided to introduce a guarantee scheme and the expansion of deposit insurance coverage, it created some unintended problems.