What is a Deposit (and Why Does It Matter)?

Murdoch University Electronic Journal of Law, Vol. 13, No. 2. p. 202, 2006

Journal of Banking and Finance Law and Practice, Vol. 17, p. 283, 2006

21 Pages Posted: 7 Feb 2011

See all articles by Rhys Bollen

Rhys Bollen

Monash University - Faculty of Law

Date Written: June 30, 2006

Abstract

Deposit-taking is an ancient business or profession. But far from being a term of art, “deposit” and “deposit-taking” has not always been defined. Recent developments, both in the legislation and industry practice, mean that the concept of a deposit needs to be reviewed.

This article looks at the history of deposit-taking and the concept of a deposit. It then considers the legal definitions of deposit-taking and banking business, under the common law and statute. The middle section of the paper examines the legal concept of a deposit, its character and implications. The paper then concludes with a discussion of the regulation of deposit-taking, and the practical implications of a modernisation of the concept of deposit for those regimes.

Why is the definition of deposit and deposit-taking important? Deposit-taking is subject to a specialist and interventionist regulatory regime in most countries, including in Australia.

Whether a product is a deposit has significant implications for customers (such as whether depositor protection regimes apply) and for issuers (such as what types of regulatory requirements, for example capital adequacy, apply). For these reasons, the definition of concepts of deposit and deposit-taking has real-world implications.

Suggested Citation

Bollen, Rhys A., What is a Deposit (and Why Does It Matter)? (June 30, 2006). Murdoch University Electronic Journal of Law, Vol. 13, No. 2. p. 202, 2006, Journal of Banking and Finance Law and Practice, Vol. 17, p. 283, 2006, Available at SSRN: https://ssrn.com/abstract=1756073

Rhys A. Bollen (Contact Author)

Monash University - Faculty of Law ( email )

Wellington Road
Clayton, Victoria 3800
Australia

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