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Tuesday, 11 February 1986
Page: 77

(Question No. 154)

Senator Bolkus asked the Minister representing the Treasurer, upon notice, on 27 March 1985:

(1) Are ``lender of last resort'' facilities in the United States limited to guarantees or deposits up to a maximum of $US100,000 any other support being at the discretion of the monetary authorities in the United States.

(2) Does the Reserve Bank of Australia assume any ``lender of last resort'' responsibilities to supplement those in the United States, in the case of overseas operations of Australian banks; if so, what is the matter of those responsibilities.

(3) Are Australian banks or the Reserve Bank of Australia required to warn Australian residents that any deposits they make with US branches and subsidiaries of Australian banks are subject to qualitatively different degrees of risk than similar deposits, made within Australia.

(4) Are similar warnings required in other countries where ``lender of last resort'' facilities offer less security to depositors in those countries than to depositors in Australia.

Senator Walsh —The Treasurer has provided the following answer to the honourable senator's question:

(1) Member banks of the US Federal Reserve System, and foreign banks in the United States which accept retail deposits, are required to have their deposits insured with the Federal Deposit Insurance Corporation (FDIC), up to US$100,000 for each account. FDIC insurance is voluntary for other banks, although most have elected to be insured. FDIC may also provide funds for the general support of a bank and may offer assurance to depositors beyond the amount of $100,000. As a separate matter, the Federal Reserve system may provide emergency credit, on terms and conditions at its discretion, to individual banks facing financial stringency.

(2) The Reserve Bank has power, at its discretion, to lend to an Australian bank but the Reserve Bank does not assume any specific responsibility of this nature.

(3) No.

(4) Not to the knowledge of the Reserve Bank.