Crumbling rock of capitalism

The announcement of the increase to €100,000 as the maximum level of compensation payable under the Depositors Compensation Scheme (DCS) is welcomed and supported as it offers reassurance and confidence in one's savings.

However, one's gratitude and appreciation for such commendable, although long overdue, affirmative action - which at first glance appears magnanimous but on closer scrutiny is all tip with no iceberg - is somewhat tempered when credence is given to two essential points.

One is that I have long advocated an increase in this compensation amount (as the MFSA can readily bear testimony to) long before the current tumultuous financial turmoil we find ourselves intrinsically linked with, given that it was the lowest level throughout the EU member states and indeed the world - amounting to a paltry, derisory and vastly inferior amount of €18,000 (incidentally and inexplicably not disclosed in any of our banks terms and conditions yet conversely clearly, concisely, unequivocally and prominently displayed and promulgated by all banks in Europe and globally (even those non-Maltese banks operating in Malta).

Now we have this knee-jerk reaction measure by the government enforced out of fear and trepidation which is exacerbated by the immutable fact that this insurance or protective initiative is in fact funded by the Maltese taxpayer, when I venture to suggest, it should be financed by the banks through contributions emanating out of the vast and obscene profits generated by them (largely supplied courtesy of customers' deposits or business) on an ever-increasing annual basis.

Therefore, this relates to the inevitability that the Maltese taxpayer is ultimately under-writing this insurance policy and thereby underpins our own stability and confidence levels.

In conclusion, how optimistic can we be that the government will, in any event, be in a position to fulfil the financial commitment to pay out to depositors, given their precarious financial situation, should the scenario arise in the event of a bank's default and administration insolvency? Perhaps sleeping on one's money is not such an unattractive, insecure or frivolous option after all (especially germane given the meagre offerings available as interest payments against savings accounts) and that the advent of so-called Socialist Capitalism is not so far-fetched or inconceivable.

For the rock upon which capitalism is built may turn out to be nothing more than a sandbank...with the tide rushing in fast.

Time to head for the hills perhaps?