Lack of deposit insurance could trigger capital flight to countries with it.
Business Data Israel (BDI) warns that because Israel is one of the few countries lacking formal deposit insurance, there is significant risk of capital flight to countries that have it. BDI notes that foreign residents have $23.2 billion in deposits in Israeli banks.
BDI says that many developed countries have deposit insurance, including the US, Canada, Japan, France, Italy, the UK, and Switzerland. The insurance generally covers deposits up to around $100,000. The US raised the Federal Deposit Insurance Corporation (FDIC) coverage to $250,000 this month. Germany, Denmark, and Iceland have all instituted deposit insurance this month and other countries are considering similar measures.
Published by Globes [online], Israel business news - www.globes-online.com - on October 15, 2008
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