October 6, 2008
Germany said on Sunday it would guarantee all private German bank accounts – currently worth €568bn – in a dramatic move to prevent panic withdrawals as fears over the worldwide financial crisis spread to Europe’s largest economy.
“We want to tell people that their savings are safe,” Angela Merkel, chancellor, said at an unscheduled press conference on Sunday. The scheme would cover existing accounts and others which savers might open.
German government officials also late on Sunday said the country’s commercial banks had agreed to inject an extra €15bn of liquidity into Hypo Real Estate, the ailing German mortgage and public sector lender, raising the bail-out agreed last week to €50bn, the largest since the outbreak of the financial crisis. The original rescue attempt had threatened to collapse after it emerged at the weekend that the full extent of Hypo’s funding gap had not been disclosed.
Berlin’s decision on savings – which followed controversial action by Ireland last week to guarantee the liabilities of six of its banks – will see the abolition of its current protection scheme, which guarantees 90 per cent of all bank deposits but only up to €20,000 per account.
This article was posted: Monday, October 6, 2008 at 9:02 am