Hong Kong is set to increase its bank deposit protection guarantee to HK$800,000 ($102,000), effective as early as the fourth quarter of this year, aimed at providing a stronger financial buffer during times of economic strain.
During a briefing on Tuesday, the Hong Kong Deposit Protection Board announced the adjustment, which will raise the current cap of HK$500,000. Donald Chen, Chief Executive Officer of the Board, mentioned that a bill outlining these changes will be presented to the city’s Legislative Council within the next few months, with implementation anticipated in the fourth quarter. Additionally, further enhancements are slated to take effect in early 2025.
Chen highlighted that these changes will extend coverage to over 92% of the city’s depositors. While Hong Kong’s protections exceed those of Asian counterparts like Japan and Singapore, they are lower compared to the US and the UK, according to information from the Hong Kong Monetary Authority.
The review process commenced in July last year following a series of bank failures in the US, which sparked global discussions about the extent to which governments should safeguard bank savings in times of financial turmoil and declining confidence in banking systems.
Further consultations to adjust the cap are scheduled for 2027, with a shorter review window of three years, given the uncertain global landscape regarding deposit insurance.
Chen emphasized the Board’s willingness to consider increasing the protection limit in the future and underscored the importance of adaptable policies in response to changing circumstances.