Hong Kong will raise its guarantee on bank deposit savings to HK$800,000 ($102,000) starting at the earliest in the fourth quarter to provide a better buffer during times of stress.
At a briefing Tuesday, the Hong Kong Deposit Protection Board said the cap will be raised from the current HK$500,000 ($64,000). A bill for the changes will be introduced to the city’s Legislative Council in the next few months for an implementation in the fourth quarter, said board CEO Donald Chen. Other enhancements will come into force in early 2025.
The changes will allow more than 92% of the city’s depositors to be covered, Chen said. Hong Kong’s protections are higher than Asian peers such as Japan and Singapore but lower than the U.S. and UK, according to a handout from the Hong Kong Monetary Authority.
The review started in July last year after a string of U.S. bank failures stoked a global debate on how much governments should guarantee bank savings in the event of financial stress and collapse of confidence to banking systems.
Another round of consultations to adjust the cap will commence in 2027 at a shorter review window of three years instead of five, in light of the uncertain global landscape on deposit insurance.
The board is “open-minded” about room to further increase the protection limit in the future and fully appreciates that policies should be adaptable to changing circumstances, Chen said.