With the encouragement of the Bank of England, the UK’s bank supervisors – today at the FSA, from next year at a new Prudential Regulation Authority within the Bank – are requiring deposit takers to advertise prominently the availability and terms of deposit insurance, in every branch, on every ATM, on every key webpage. Further, crucially, the UK’s Financial Services Compensation Scheme will ensure they can deliver rapid payout, ideally within 7 days. This requires banks to hold more information about their depositors than it seems they would choose on their own. It is perfectly reasonable for society to demand this. Once those conditions are met,2 the deposit insurance regime has the potential to revolutionalise retail banking. By assuring retail depositors of safety, new banks should find it easier, other things being equal, to establish a deposit base, lowering barriers to entry into banking. Later I shall come to who pays for this: it isn’t government and the taxpayer but the industry itself. Deposit insurance and resolution But we know from experience that liquidation and payout to insured depositors can be a seriously inferior way of handling the failure of some deposit-takers. That is because liquidation can entail a destruction of value, disruption to the provision of services, and other spillovers to the rest of financial system. Some of that can be avoided if, instead, we are able to transfer the insured deposit book and some good assets to another bank (or other  1  Paul Tucker is chairman of the FSB’s Resolution Steering Group.
Eddie Yue: Investment in infrastructure is crucial to Asia’s growth Statement by Mr Eddie Yue, Deputy Chief Executive of the Hong Kong Monetary Authority and Head of the Delegation of Hong Kong, for the 46th Asian Development Bank Annual Meeting, Delhi, 4 May 2013. *  *  *  I would like to thank the Government of India for hosting the 46th Annual Meeting of the Asian Development Bank (ADB). I wish to take this opportunity to pay tribute to Mr Haruhiko Kuroda for his excellent work in leading ADB for more than eight years. We welcome the appointment of Mr Takehiko Nakao as the new President of ADB, and look forward to continue working closely with the Bank under his leadership in furthering the development of the region. Global economic sentiment has improved since the beginning of this year. The announcement of further accommodative monetary easing by major advanced economies has reduced tail risks and stabilised financial markets. But while the accommodative monetary policy will help authorities buy time to solve the problem, it is by no means a substitute for medium-term fiscal consolidation and structural reforms that are required for the economy to regain competitiveness and return to a sustainable path. Looking ahead, economic adjustments and deleveraging in both the public and private sectors are set to continue in the advanced economies, and regional economies will increasingly have to look to themselves for new sources of growth.