Now Your Money’s Even Safer In The Bank
Or perhaps we should say that now more of your money is safe in the bank. For the Bank of England has just decided to raise the amount of deposit insurance that we might get if a bank goes bust. The aim here is to make sure that peoples’ worries don’t set off another bank run like that which happened to Northern Rock.
At the moment a deposit of up to £85,000 in a bank is guaranteed by the Bank of England. If the bank goes tits up then you still get your £80k back. This covers all your accounts at the one bank though: so it’s not each account. Now they’re saying that in certain circumstances it could be up to £1 million which is covered:
The Bank of England said on Monday that if someone has a large amount of money in their account for reasons such as buying a house, they will be protected by the Financial Services Compensation Scheme.
Currently, £85,000 worth of savings are protected in the event of a bank failure, but the Bank said this should be extended. The increased protection, which would apply from six months after the money is transferred, applies to:
• Funds in an account because someone is buying a house
• Pay-outs from life insurance, divorce settlements and retirement or dismissal pay.
• Compensation for criminal injuries or wrongful conviction
I should be said that this isn’t going to make all that much difference to all that many people. And it’s also not going to make much difference to the chances of a bank run either. For it’s not actually that movement of the money that is a problem in a bank run. It’s the queues of people trying to move their money that is. And as there are never all that many people in hte country in the situations above at any one time they’re just not going to end up causing a queue.
So it’s all vaguely interesting but probably is best classified as someone wanting to be seen doing something. Rather than, you know, anything useful or important.