The government is under pressure to overhaul its deposit guarantee scheme just days before it comes into force.
The pressure comes as banks voice their concerns that the three year $1 million deposit guarantee threshold will have significant distortionary effects on the financial system.
According to today’s Australian Financial Review the major banks have met with prime minister Kevin Rudd and treasurer Wayne Swan several times over the past month warning that the deposit guarantee must be wound back in duration and scope.
If it didn’t, they said, it could become ingrained in the financial system and challenging to remove.
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