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Article: Deposit insurance hike seen to raise moral hazard
- Article from:
- The Manila Times
- Article date:
- October 24, 2008
- Author:
CopyrightCopyright Content Parnership Pty Ltd Oct 24, 2008. Provided by ProQuest LLC. (Hide copyright information)
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THE legislative proposal to increase the maximum insurance coverage of bank deposits would cause a spike in interest rates and trigger moral hazard, a Bangko Sentral ng Pilipinas (BSP) official said.
"There will be higher insurance premium for the banks. As a result, the banks may ask for higher interest rates from its clients and borrowers or there will be low deposit takes," the official, who requested anonymity, said.
"On the issue of moral hazard, people will be all trusty. [There will be] no discrimination between banks. They'll just deposit it anywhere. That's the down side," the official added.
Having said this, the official said the increase in the insurance coverage may ...