Comparing Between Deposit Insurance Schemes in The United Kingdom and Saudi Arabia And How Can the Saudi System Get Benefit from The British System

Abstract

Deposit insurance system is one of the components of monetary system safety net which help to promote financial steadiness. Deposit insurance is a unique kind of insurance, where depositors are assured against loss in case of the bank failure. It was first established in the US during Great Depression of 1930s in order to meet serious challenges created by regular bank suspensions. It is important and beneficial for the deposit insurance to have an account with FDIC-insured bank because this is how FDIC protect money in unlikely event of bank’s failure. This means that opening deposit account in the FDIC bank is automatic protection. The FSCS is the DGS for the United Kingdom. It is an autonomous agency established by the UK government and financed by the monetary service business which protect deposits made by British clients into accounts offered by controlled monetary service providers. Due to lack of established interbank market as well as the absence of sources of funding, financial institutions in Saudi Arabia depend on SAMA for liquidity management via reverse repos, repos together with SAMA bills.