Australia guarantees bank deposits for three years

| 12 October 2008 08:17

This comes from the Sydney Morning Herald. I will have a comment on this post later today.

UPDATE: combined with the news out of the EU regarding bank backstops and interbank guarantees, the news from Australia is now being greeted quite well. The Aussie and Kiwi Dollar are trading straight up in massive currency moves. The overall tone of Monday morning trading is bullish, especially for bank shares.

Australia will guarantee all bank deposits for three years and guarantee wholesale funding to Australian banks in an attempt to combat the global credit crisis, Australian Prime Minister Kevin Rudd said.

Australian will also double the funds available for mortgage-backed securities to $8 billion to help maintain liquidity for non-bank lenders, Mr Rudd told reporters today, adding the measures were part of an international response to the crisis.

He said the Australian government was in close contact with other countries, including the G-20, and coordinated action was crucial. A government spokesman later said the Australian move was being coordinated with New Zealand, comments later confirmed by New Zealand media.

”The measures I have announced today are part of also international measures designed to unclog the arteries of the global financial system,” Rudd told reporters.

”The government is reassuring Australians that their credit union, building society or bank is a safe haven for their savings,” Louise Petschler, chief executive of Abacus – Australian Mutual, an industry group, said in a statement, according to Bloomberg News.

Opposition Leader Malcolm Turnbull welcolmed the move to guarantee all deposits in Australia, regardless of size.

”It’s a very important step and we will undertake to give the government every assistance in insuring that the necessary legislation will pass through the parliament promptly,” Mr Turnbull told reporters.

avatar About Edward Harrison

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages, a skill he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.

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