Deposits are cash amounts held in bank accounts or similar that are readily available for the institution to invest in the money market and customers to withdraw at immediate notice. Bank deposit insurance by the U.S. government was recently increased in response to the credit crisis, as was deposit protection in some EU countries.
Deposit accounts with banks or brokerages can be held as checking, savings or money market accounts and usually carry low interest rates. The word deposit describes the liability the bank owes the depositor, while the actual cash deposit is held as a bank asset.
The Federal Deposit Insurance Commission (FDIC) recently raised the maximum amount it insures from $100,000 per person to $250,000 in response to recent fallout from the 2007-08 credit crisis.Several days later the FDIC more than doubled the average insurance premiums paid by banks and thrifts to the FDIC from 6.3 cents per $100 to 13.5 cents.
European finance ministers recently struck out on their own in deciding to increase their national deposit-insurance schemes, with Germany going furthest by offering a blanket insurance on all $693 billion on deposit there.The European Union has now agreed to insure all deposits across the EU up to 50,000 euros, although several countries have emulated Germany and will insure even more.