Philippine Deposit Insurance Corporation

At the height of the Global Financial Crisis in October 2008, moves by other countries to expand the scope of their bank deposit insurance led the Philippine government to consider similar measures. Unlike most countries, however, the government did not make the changes immediately. After a lengthy legislative process, the President signed a bill on April 29, 2009, doubling the Philippine Deposit Insurance Corporation’s (PDIC’s) coverage from PHP 250,000 to PHP 500,000 (about USD 5,300 to USD 10,600) per depositor, with any losses in excess of PHP 250,000 covered by the national government. The changes took effect on June 1, 2009. The mandatory insurance applied to all banks operating in the Philippines and included commercial, checking, savings, time, and thrift accounts. The PDIC’s Deposit Insurance Fund was very well-funded before the crisis, with assets to cover 6.1% of total estimated insured deposits at the end of 2007. Between June 1, 2009, and May 31, 2012, the PDIC reported internally that it paid 51,889 depositor accounts at 79 closed banks a total of PHP 12.8 billion. Government funding for deposits exceeding PHP 250,000 expired on May 31, 2012. The deposit insurance limit has remained at PHP 500,000 per depositor since 2009

South Korea: Corporate Liquidity Support Organization

The spread of the COVID-19 pandemic in the early months of 2020 strained liquidity in short-term corporate funding markets around the world. In response, the Korean government enacted a variety of direct and indirect measures to promote the smooth flow of credit to households and businesses. Most of these measures focused on highly rated companies. Recognizing the need to extend assistance to lower-rated issuers, the Bank of Korea (BoK) invoked its authority under Article 80 of the Bank of Korea Act to establish and fund the Corporate Liquidity Support Organization, Co., Ltd., a special-purpose vehicle (SPV) authorized to purchase up to 10 trillion Korean won (KRW) (USD 8.3 billion) of corporate bonds, commercial paper (CP), and short-term bonds that did not meet the eligibility criteria for other support programs. The SPV began purchasing securities on July 14, 2020, accumulating a total of KRW 4.0 trillion worth of corporate bonds and CP by the end of July 2021. Although the SPV was initially scheduled to purchase assets for six months from the date of establishment, the BoK extended the timeframe twice to end on December 31, 2021

Canada: Commercial Paper Purchase Program

In response to the onset of the COVID-19 crisis in early 2020, the Bank of Canada (BoC) enacted a wide-ranging program of monetary measures intended to support the flow of credit to individuals, firms, and municipalities. On March 27, 2020, the BoC announced the establishment of the Commercial Paper Purchase Program (CPPP), a liquidity facility designed to purchase highly rated commercial paper (CP), including asset-backed CP, from Canadian incorporated firms, municipalities, and provincial agencies. The BoC funded the program using settlement balances, and it retained several private firms to manage the asset purchases and liaise with issuers. Although firms took advantage of the program during its first month of operations, usage declined rapidly thereafter; the BoC\u27s CP holdings peaked at approximately 3.0 billion Canadian dollars (CAD) (USD 2.2 billion) the week of April 29, 2020. Alongside the BoC\u27s other large-scale asset purchase programs, the CPPP helped to quickly restore normal market functioning. The CPPP began making purchases on April 2, 2020, and operated for 12 months, terminating as scheduled on April 1, 2021

Greece: Hellenic Deposit Guarantee Fund

Responding to general financial and economic volatility during the Global Financial Crisis (GFC), the Greek government in November 2008 sought to shore up public confidence in the banking system by raising the deposit-insurance limit from EUR 20,000 to EUR 100,000 (127,000 USD) per depositor for three years. The Hellenic Deposit Guarantee Fund (HDGF) was responsible for administering this adjustment, which was accompanied by a fivefold increase in the percentages used for calculating member institutions’ annual contributions. All credit institutions that were authorized to operate in Greece, including branches of foreign banks without their own coverage, were required to participate in the HDGF. The HDGF charged annual fees and insured savings accounts, demand deposits, current accounts, and time deposits. Although the increase in deposit-insurance coverage was initially set to expire on December 31, 2011, the Greek parliament opted to make the alteration a permanent feature of the banking system in October 2011. The HDGF did not issue any payouts between 2008 and year-end 2011

United States: Term Asset-Backed Securities Loan Facility II

The outbreak of the COVID-19 pandemic in early 2020 caused widespread economic uncertainty, prompting government officials to act swiftly to combat potentially severe fallout. On March 23, 2020, the Federal Reserve announced a series of monetary policy measures and established several emergency lending facilities to assist the US economy. Among these, the Fed revived the Term Asset-Backed Securities Loan Facility (TALF), a Global Financial Crisis (GFC)-era facility that used a special purpose vehicle (SPV) to encourage the issuance of asset-backed securities (ABS). Its main purpose was to restore the flow of credit to households and businesses. TALF II made $100 billion in loans available; each loan had a term of three years, was non-recourse to the borrower, and was secured by eligible AAA-rated ABS. Borrowers could post a wider range of collateral than in the earlier TALF program. Eligible collateral included certain newly issued non-mortgage-backed ABS, certain types of legacy commercial mortgage-backed securities (CMBS), and static collateralized loan obligations (CLOs). After operating for about six months, the TALF was closed by an act of Congress and ceased extending credit on December 31, 2020. Early evaluations of the TALF concluded that its announcement helped to calm markets and normalize interest rate spreads, despite relatively low usage of$4.4 billion

China: 1999 Asset Management Corporations

Chinese financial authorities began to liberalize their economy in the 1970s, though it would take two more decades to realize a solution to the massive non-performing loan (NPL) problem faced by state-owned commercial banks (SOCBs). In order to remove and dispose of bad assets left over from the policy-lending era of the former command economy, the State Council created four public asset management corporations (AMCs) between April and October of 1999. The AMCs, under the administration of the Ministry of Finance, were responsible for the acquisition, management, and disposal of NPLs from their assigned state-owned commercial bank. In addition to maximizing returns on the recovery of assets offloaded by the SOCBs, the AMCs were mandated to assist in the restructuring of state-owned enterprises (SOEs) by facilitating debt-to-equity swap agreements. The government provided funding for NPL purchases in the form of an initial equity capital injection of RMB 40 billion (provided by the Ministry of Finance [MoF] and split equally among the four AMCs), credit from the People’s Bank of China (PBoC), and special AMC bonds held by the big four state-owned commercial banks. In total, RMB 1.4 trillion (1 USD = RMB 8.3 in 1999) in NPLs were acquired by the four AMCs over the course of 1999 and 2000. After having transferred approximately RMB 136.3 billion (USD 16.9 billion) to the MoF and PBoC, the AMCs ceased NPL operations by the end of December 2006. They have since been restructured to operate as nonbank financial institutions

United States: Commercial Paper Funding Facility II

The outbreak of the COVID-19 pandemic in early 2020 caused widespread economic uncertainty, prompting government officials to act swiftly to combat potentially severe fallout. On March 17, 2020, the Board of Governors of the Federal Reserve announced the revival of the Commercial Paper Funding Facility (CPFF), a program that the government had utilized during the Global Financial Crisis (GFC) to provide a liquidity backstop to domestic issuers of commercial paper (CP). As with the first iteration of the program, the Federal Reserve Bank of New York (FRBNY) funded a special purpose vehicle (SPV) to purchase highly rated, US dollar-denominated CP, including asset-backed commercial paper (ABCP). The FRBNY\u27s loans were secured by all assets of the SPV, as well as a $10 billion equity investment from the Treasury Department. The SPV\u27s CP holdings peaked at$4.3 billion in the week of May 14, 2020, but quickly dropped over the following months. Although the SPV was scheduled to cease operations on March 17, 2021, the Fed extended the program through March 31, 2021. On July 8, 2021, the Fed announced the legal termination of the facility

Korea: Bank Recapitalization Fund

Following the collapse of Lehman Brothers on September 15, 2008, a number of foreign governments enacted stabilization measures to protect their domestic economies in the wake of the global credit crunch. The Bank Recapitalization Fund (the Fund), announced by the South Korean government on December 18, 2008, and implemented on February 15, 2009, was one such intervention intended to assist Korean commercial banks in strengthening their capital bases and thus restore normal lending practices between banks and nonfinancial institutions. Invoking its authority under Article 65, Section 3 (“Emergency Credit to Financial Institutions”), of Chapter IV of the Bank of Korea Act, the government committed up to KRW 20.0 trillion for the purchase of preferred shares, hybrid securities, or subordinated debt from participating banks. Each bank wishing to utilize the fund was required to sign with the Korean government a Memorandum of Understanding (MoU) stating its commitment to using the funds gained from the sales to support the real economy. Continued individual usage, interest rates, and restrictions were determined based on the institution’s adherence to the MoU terms. On March 31, 2009, the Fund purchased approximately KRW 4.0 trillion in hybrid securities and subordinated debt from eight Korean banks and financial institutions. By December 2011, the government had recovered KRW 2.8 trillion through bond sales and bank buyback arrangements. The remaining KRW 1.2 trillion was repaid to the government by August 2016, at which point the Fund ceased operations

Taiwan (ROC): Central Deposit Insurance Corporation

In September 2008, the failure of a large Taiwanese bank led depositors to shift billions of dollars from private banks to state-owned banks. To stem the runs, the government on October 7 invoked its authority under Articles 28 and 29 of the Deposit Insurance Act to announce a temporary, unlimited guarantee on all deposit accounts of institutions covered by the Central Deposit Insurance Corporation (CDIC). In addition to removing the previous TWD 3 million (USD 90,000) cap per depositor, the expanded coverage included several types of deposit accounts that had not been previously insured by the CDIC. As the CDIC’s deposit insurance fund was fully depleted at the time, the government would have had to identify alternative financing if any banks had failed. The program was initially set to expire on December 31, 2009, but the government extended it by a year due to ongoing economic turmoil related to the GFC and international competition. As of year-end 2009, the CDIC insured TWD 910 billion in eligible accounts at 383 institutions. The CDIC did not pay out any claims under the expanded program

The State Guarantee of External Debt of Korean Banks (South Korea GFC)

Following the Lehman Brothers bankruptcy of September 15, 2008, a number of foreign governments enacted stabilization measures in order to bolster their currencies and inject much-needed liquidity into domestic markets. As part of its effort, the Korean Ministry of Strategy and Finance announced a series of government interventions that included a three-year guarantee of foreign debt issued (including extensions of maturity) by domestic banks between October 20, 2008, and June 30, 2009. This opt-in program was introduced as a preemptive step in ensuring that Korean financial institutions would retain competitive access to external funding in the wake of the global credit crunch. Though the guarantee cap was set at $100 billion, maximum utilization totaled only$1.3 billion issued by a single participant (Hana Bank). On June 30, 2012, the guarantee scheme was terminated with the repayment of all obligations by Hana Bank