The idea behind deposit protection is to set a level below which the assurance of value holds, and above which it does not. Practice, I would suggest, points to the difficulty of this principle. In seeking to solve too big to fail we have tackled this problem by requesting an additional slice of subordinated liabilities which can explicitly bear losses by being converted into equity in the event of a resolution. I'm not talking here about AT1 securities, but what comes further up the hierarchy – what in Europe we call 'Eligible Liabilities'. The point is that for large banks we have reinforced the assurance of deposits by requiring a bigger cushion of loss absorbing liabilities. But smaller banks find it harder to issue marketable long-term debt securities that can count as Eligible Liabilities. I think the answer here lies in the world of deposit insurance. 3/6  BIS - Central bankers' speeches  The US authorities have announced a review of their deposit insurance system. In the UK, the Bank is also considering improvements to our approach to depositor pay-outs for smaller banks which do not have Eligible Liabilities. Our work has thus far focused on the speed of pay-outs. Going further and considering increasing deposit protection limits could have cost implications for the banking sector as a whole. As with all things relating to bank resolution, there is no free lunch. Two issue areas to go.
Let me end with the short version of the main points: 1: I don't believe we face a systemic banking crisis; 2: We must ensure that financial stability continues to mean that monetary policy takes into account financial conditions but does not have to aim off for instability; 3: This requires robust structures for financial stability policymaking;  5/6  BIS - Central bankers' speeches  4: Central bank balance sheets will remain larger than pre-crisis for financial stability reasons; 5: We don't know yet where central bank balance sheet reduction will need to stop in terms of the necessary level of reserves; 6: This will in part depend on the desired future size and make-up of banks' liquidity buffers; 7: Stable coins will need to have the characteristics of, and be regulated as, inside money; 8: The key question on retail digital money is can we envisage a demand for it, but we should guard against failure of imagination; and be able to accommodate it within the regulatory framework; 9: If retail digital money is part of the future, it would be better not to disturb the need to have both inside and outside money – so we cannot rule out a need for CBDC; 10: We will need to revisit the protection of inside money in the form of deposits, especially in smaller banks; 11: Stress testing the financial system is crucial, but stress tests will not always deal with Black Swans – that's why resolution and other policy intervention tools must be in place; 12: Non-Bank Financial Intermediation is a very large and heterogeneous landscape – it presents surveillance challenges of both breadth and depth; 13: NBFI leverage and inter-connectivity can be hard to map; 14: NBFI issues are often inherently cross-border in nature.