In this Financial Regulation Discussion Paper (FRDP), Professor Kevin Davis explains why the Government decision announced today to not impose an upfront fee on banks, based on insured deposits, to fund the Financial Claims Scheme is correct on both logical and practical grounds. While a case could be made for imposing a fee based on total bank liabilities to finance a resolution fund, a better option is ensuring unquestionably strong bank equity capital positions.
This paper was prepared by Professor Kevin Davis, Research Director of the Australian Centre for Financial Studies.
The ACFS Financial Regulation Discussion Paper series provides independent analysis and commentary on current issues in financial regulation with the objective of promoting constructive dialogue among academics, industry practitioners, policymakers and regulators and contributing to excellence in Australian financial system regulation.
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