NEW YORK (CNN/Money) - Federal Reserve Chairman Alan Greenspan told Congress Tuesday that he saw no reason to raise the limit on bank deposits insured by the U.S. government.

The central bank chairman, speaking before the Senate Banking Committee, objected to last year's recommendation by the Federal Deposit Insurance Corp. (FDIC) that the $100,000 limit on guarantees for bank deposits be raised.

"In [the Fed's] judgment, neither financial stability, nor depositors, nor depositories are being disadvantaged by the current ceiling," Greenspan said in his prepared testimony.

Earlier this month, the House Financial Services Committee overwhelmingly approved a proposal to raise the limit to $130,000 for most individual accounts. But the Bush administration -- including Treasury Under Secretary Peter Fisher, who also testified Tuesday -- objects to the idea, saying the current ceiling encourages banks to be more careful.

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While acknowledging that the deposit insurance system needs reform and agreeing with other FDIC recommendations, Greenspan took Bush's side, saying raising the ceiling would "reduce the incentive for market discipline, without providing any real evident public benefits."

A rash of bank failures in the United States during the Great Depression led to the institution of federal deposit insurance in 1934. The first limit for insured deposits was $2,500, and that was almost immediately raised to $5,000 -- an amount equal to less than $60,000 today, Greenspan pointed out.

-- from staff and wire reports