The US federal agency that is responsible for guaranteeing bank deposits has asked the Congress for authority to increase the limit on the amount of money it insures for private bank accounts.

Sheila Bair, Chairperson of the Federal Deposit Insurance Corp announced late Tuesday, that the agency has sought temporary authority from the US Congress to be able to raise the limit on the amount of money it insures for individual bank accounts. However, she did not specify what the new limit should be. Currently the FDIC insures up to $100000 per account and this limit was put in place in 1980.

According to Bair, increasing the deposit insurance limit would bring back the confidence among depositors who have been shaky ever since several major banks of the country collapsed or was saved from bankruptcy by external support. The fear among bank depositors regarding the safety of their assets is further fuelling a crisis of confidence in the marketplace already reeling from the meltdown on Wall Street. To break this vicious circle, it was necessary to bring back confidence among depositors and one important was this could be done was to raise the limit on the amount of money insured by FDIC in individual bank deposits.