Singapore’s central bank responds to feedback by increasing deposit insurance coverage for small depositors
The Monetary Authority of Singapore (MAS) will raise the deposit insurance (DI) coverage cap for individual depositors from S$75,000 to S$100,000, effective April 1, 2024. This decision comes in response to feedback from a public consultation paper released in June 2023. The first part of MAS’s response to the feedback, issued on September 22, confirmed the increase and noted that the industry would have more time to implement the changes.
While the majority of respondents supported the increase, some suggested a higher cap and an expanded scope of coverage that includes foreign currency deposits. MAS explained that any increase in the DI coverage threshold requires careful consideration due to the associated costs for banks and customers. The central bank emphasized that the DI scheme aims to protect small depositors, and at the S$100,000 cap, it would fully cover 91% of insured depositors.
The decision to exclude foreign currency deposits was based on their limited relevance to small depositors, as these deposits make up a small portion of their savings. MAS also stated that it would continue to monitor foreign currency deposits and review the DI scheme periodically.
This change is not a direct response to the recent collapses of banks like Silicon Valley Bank but reflects ongoing efforts to ensure the adequacy of Singapore’s DI ceiling. When the coverage limit was last raised in 2019, it was set at S$75,000, which covered about 90% of depositors. The increase to S$100,000 is seen as necessary to keep pace with the growing savings of depositors as incomes rise in Singapore’s evolving economy.
