Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
SUBSCRIBE TO OUR NEWSLETTER SIGN UP
Powered by MOMENTUM MEDIA

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

Deposit guarantee scheme keeping rates high

Staff Reporter 1 minute read

The government’s deposit guarantee scheme is distorting financial markets, keeping interest rates on deposits higher than they should be, according to Commonwealth Bank chairman John Schubert.

Speaking at a business lunch, Mr Schubert said the big banks had not asked for the guarantee and a transition out of it should to be thought through as soon as possible, The Australian reported today.

In order to attract deposits the Commonwealth Bank had to compete with second-tier banks’ eight per cent plus interest rates, Mr Schubert said, which was pushing up internal funding costs.

“Interest rates are higher than they would be otherwise,” he said.

Mr Schubert called for the guarantee to be capped at a lower level to ease the “dysfunctional behaviour” in the market.

Advertisement
Advertisement

The deposit guarantee scheme has been the subject of ongoing concern since its inception, largely due to the negative impact on institutions not included in the initiative.

Published: 06-11-08

Related articles
Guarantee scheme capped but fund managers remain excluded 27-10-08


Deposit guarantee scheme keeping rates high
default
TheAdviser logo
default

TODAY'S POLL

View results >

Who do you aggregate through?

Thank you for your vote, you can see the results here.

more from the adviser
RBA 2 TA RBA maintains status quo amid calls to consider cuts

The central bank has held the cash rate at its effective lower bo...

CBA 2 CBA announces interest-only lifeline

The bank has become the second major lender to offer customers t...

digital Brokers cite refinancing as key profit driver

The vast majority of brokers believe that refinancing clients is ...

FROM THE WEB