Following the footsteps of Hong Kong, Australia, Ireland, Germany, Denmark and Greece to fully guarantee bank deposits, Malaysia Government likewise has announced that they will fully guarantee, with immediate effect, all ringgit and foreign currency deposits with commercial, Islamic and investment banks regulated by Bank Negara.The Central Bank and the Ministry of Finance said in a joint statement the guarantee also extended to deposit-taking development financial institutions regulated by the central bank.
The deposits would be fully guaranteed by the government through Perbadanan Insurans Deposit Malaysia (PIDM) until December 2010.
The guarantee extends to all domestic and locally incorporated foreign banking institutions; and access to Bank Negara’s liquidity facility will be extended to insurance companies and takaful operators regulated and supervised by the Central Bank.
The above move will indeed shore up the country's banking sector in terms of consumer and business confidence. At the same time, this should prevent potential outflow of funds from the country to other countries (particularly Singapore) that offer the full guarantee.
In the same accord, the Singapore Government has also announced full deposit guarantee.
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