Money &amp

Capital MarketsSoon after the worldwide panic, financial turmoil struck the globe. Various economies flurried around to guard and hedge themselves against any potential impact of the same. Two such instances could be found in the economies of Australia and New Zealand, who have been acquiring liabilities in the form of demand deposits and wholesale funding for a long time. Accepting such deposits happened to be one of the prime sources of financing national interests and hence, the basis of the investment. With the global financial system under pressure, there were little chances of attracting a continual flow of such resources and furthermore, the domestic financial systems were at the verge of facing a massive withdrawal move. News about the collapse of Lehman Brothers a few days back added to the already burgeoning threat of an upcoming financial crash. Amidst such chaotic scenario, the Australian and the New Zealand governments thought it would be best to implement measures which could at least assure the people about economic stability in the respective nations. Hence, the domestic administrative bodies of the two countries followed the examples set by some of their European counterparts, in introducing guarantee schemes to monetary deposits. These schemes held the national governments as the guarantors of the liabilities held in the form of deposits in authorized deposit-taking institutions (ADI’s) incorporated in each of the two individual nations, irrespective of their origins (The Australian Government, 2008).The present paper is an attempt to summarise the ultimate objectives of the decision-makers while setting the liabilities guarantee schemes and the innate features of the same.

Back To Top