Are depositors in the firing line?

Depositors holding more than €100,000 in insolvent Danish bank Amagerbanken have been forced to share the burden of its bailout - a development which could unsettle deposit holders

12th February, 2011

Back when Central Bank govern or Patrick Honohan was still an academic, he wrote a paper highlighting how certain measures added greatly to the cost to the taxpayer of sorting out banking crises.

‘‘Our empirical findings reveal that unlimited deposit guarantees, open-ended liquidity support, repeated recapitalisations, debtor bailouts and regulatory forbearance add significantly and sizeably to costs,” he wrote.

So, it is little wonder that governments and regulators who adopted such emergency...

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