Deposit protection to be set at 90%

A new law on deposit security, approved in late July by cabinet and set to take effect January 1 2002, will reduce from 100 to 90% the share of client deposits that will be protected by a deposit fund in the case of bank failures.

The Finance Ministry had argued that the protection level should be kept at 100%, but Deputy Prime Minister for the Economy Ivan Mikloš said that the 100% cover ran the risk of 'moral hazard' - people taking greater risks with unstable banks because they knew their deposits were completely protected.

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