Guarantee was for fist million$ account holders depo$ited their bank accounts in those institutions which satisfied criteria for such guarantee/insurance.
The government charged those institutions a % for providing that guarantee to the account holders at those institutions.
Policy aim was to avoid sudden huge rushes from depositors wishing to withdraw all their money from any and all institutions.
Such runs on money more likely to happen without such security, in which case otherwise financially healthy deposit taking institutions have unexpected demand for more withdrawals than they have available cash for.
The deposit guarantee is to prevent such runs, by giving guarantee to depositors - not to the banks !
Look at the BankWest takeover by CBA.
Look at the chaotic anywhere (eg USA or UK or Zimbabwe) when banks unable to satsisfy demands for cash.
CBA Price at posting:
$48.99 Sentiment: Hold Disclosure: Held
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