The Deposit Proetcion Scheme (DPS) protects depositors and reduce the risks of bank runs in the event of a banking crisis. Established in 2006, the amount protected is HKD500,000 (USD64,500). Proposed enhancements to the DPS are now to be implemented to provide a more reliable safeguard for depositors against the event of a bank failure.
The HK government proposes to make the process of paying out compensation to depositors faster if a bank fails.
For example, a “gross payout” would be adopted, so a depositor would be compensated up to the protection limit, without the need to set-off the depositor’s liabilities against his/her protected deposits in the same bank at the time of determining and distributing the payouts, and more certainty would be provided for determining the reference date used for calculating the deposit compensation amount to accelerate the calculation.
A government spokesperson said: “The proposed enhancements to the DPS will strengthen the financial safety net for general depositors, and further consolidate Hong Kong’s status as an international financial center.”