Germany to Guarantee all Private Savings Accounts
06/10/2008
On Sunday, a spokesman from the German Finance Ministry announced that all private savings accounts in the country would be guaranteed by the government.
Following on from similar moves by the Irish and Greek governments, the unlimited guarantee on individual savings and current accounts by the German government would theoretically cost it around 570 billion euros if all the banks should default on their customers.
The government's move comes as the future one of its largest financial institutions, Hypo Real Estate, hangs in the balance. Legislators and business leaders have been embroiled in frantic talks in Berlin to keep the beleaguered commercial lender afloat. A private sector rescue plan, formed by a consortium of German banks, unravelled late last week as they refused to provide a 10 billion euro line of liquidity.
German Chancellor, Angela Merkel, said that she would not allow the failure of one company to disrupt the entire nation's economy.
Pressure is now building on the UK Chancellor, Alistair Darling, to follow suit.
He said on the BBC Sunday AM programme: 'We are ready to do whatever it takes, and that is we've put money in to help banks generally. There are other measures we will be taking too, and I will announce them when we are ready to do that.'
Following on from similar moves by the Irish and Greek governments, the unlimited guarantee on individual savings and current accounts by the German government would theoretically cost it around 570 billion euros if all the banks should default on their customers.
The government's move comes as the future one of its largest financial institutions, Hypo Real Estate, hangs in the balance. Legislators and business leaders have been embroiled in frantic talks in Berlin to keep the beleaguered commercial lender afloat. A private sector rescue plan, formed by a consortium of German banks, unravelled late last week as they refused to provide a 10 billion euro line of liquidity.
German Chancellor, Angela Merkel, said that she would not allow the failure of one company to disrupt the entire nation's economy.
Pressure is now building on the UK Chancellor, Alistair Darling, to follow suit.
He said on the BBC Sunday AM programme: 'We are ready to do whatever it takes, and that is we've put money in to help banks generally. There are other measures we will be taking too, and I will announce them when we are ready to do that.'
