According to a report from The Financial Times on Sunday, The Bank of England is considering a significant revamp of its deposit guarantee scheme. This would include

increasing the amount covered for businesses and requiring banks to pre-fund the system to a greater extent, to ensure faster access to cash in the event of a lender's collapse. The review comes after the recent rapid failure of Silicon Valley Bank, and the UK's Financial Services Compensation Scheme is being urgently reviewed.

BoE Governor Andrew Bailey said that improvements to the depositor pay-outs for smaller banks were being considered, with a focus on the speed of the pay-outs. He added that increasing deposit protection limits could have cost implications for the banking sector as a whole and that there is no free lunch when it comes to bank resolution.

Regulators are reportedly concerned that the UK guarantee's limit of £85,000 covers only about two-thirds of deposits, and the relatively low level of pre-funding means delays of at least a week for customers to regain access to their cash. The safety of banks globally has raised concerns about how far authorities should go to shore up the sector if needed, particularly regional lenders in the United States. Photo by Katie Chan, Wikimedia commons.