Introduction

Deposits and payments go to the heart of the role of money as a medium for denoting exchange and transactions. Financial citizens deal with money every day. Australians have traditionally kept their savings in banks, building societies and credit unions. Savings have been used for further lending, particularly for home lending. The prime regulatory issue for deposit-taking institutions is deposit protection. Australia, unlike many countries, does not have a formal deposit insurance scheme, although from time to time this is mooted. Both the RBA and APRA have a role in the protection of depositors. Neither normally guarantees deposits and it is still theoretically possible for a bank to fail and for depositors to lose their savings.

Banks, building societies and credit unions were regulated separately prior to FSR. Since FSR, the concept of the ADI, as the product-neutral descriptor, has replaced the individual names to describe slightly different institutions which take deposits. Business and individuals also have an interest in the safety and stability of the payments system, particularly as there has been rapid change in the instruments and technology for electronic payments used in the retail payments system. This chapter will focus on both deposit-taking and payments as part of the financial services system.

The Wallis Report placed the performance of financial promises at the core of its approach to financial regulation but recognised that overall financial safety of the system does not require that all financial promises are kept.