The RBA has defended the A$250,000 cap on guaranteed bank deposits in its second submission to the Murray inquiry. Alongside the depositor preference regime in Australia, the Financial Claims Scheme "promotes confidence among depositors during times of stress, improving the resilience of the financial system and bolstering economic activity," the RBA said."The bank views the availability of a safe financial product promising full payout - that is, a deposit - as being in the public interest, and believes that private sector providers of such a product have responsibilities and should bear appropriate costs to ensure their promises are kept."A prepaid funding model for the scheme is in the works - a policy of the previous Labor government that is being continued by the Coalition."Such a model, which is now common among depositor protection schemes internationally, is in line with the principle of users paying for the benefit provided. "It would also be consistent with IMF recommendations that Australia re-evaluate the merits of an ex-ante funding model," the RBA submission concluded."The bank does not consider lowering the threshold for depositor protection under the FCS to be a high priority," it added.