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.
We are tracking the situation closely, and will take further steps as these become necessary. Singaporeans must be psychologically prepared for the problem to stay with us for some time. Each of us will have to learn more about the disease, adjust our habits and take sensible precautions, so that we can protect ourselves, our families and the people around us, and carry on with our lives. SARS is not just a medical issue; it is a test of how well Singaporeans can respond collectively to resolve a serious problem facing our society. Synopsis The same ability to respond collectively is critical to our remaking of the Singapore economy. So far the debate on economic reforms has focussed predominantly on Singapore's present situation, and indeed on our immediate problems. We need to take a step back from the close-up snapshots of where we now are, and see our challenges in a historical and international perspective. The story of a country consciously restructuring its economy to adapt to a changed environment is not unique to today's Singapore. It is a recurring theme in world economic history. Tonight, I will explore the challenges of remaking the Singapore economy against the broader context offered by the lessons and experiences of history. In particular, the experiences of Japan, China and UK offer useful insights into the process of our ongoing reforms.