Australian Govt. to guarantee ALL deposits for 3 years
Anon
Posts: 11,175
Australian Shares have surged following the announcement that all Australian bank deposits will be guaranteed.
The benchmark ASX 200 gained 5.7 percent in the first 15 minutes of trading and traded as high as 6 percent, pushing the index above the 4000 point level and recouping some of the market's massive losses from last Friday. Early deals saw more than $46 billion flood back into the market.
The market lost 8.3 percent last Friday, bringing weekly losses on the ASX200 to nearly $150 billion.
Prime Minister Kevin Rudd called a snap news conference on Sunday to say his government would guarantee Australia's entire deposit base of $600-$700 billion for three years and guarantee wholesale bank funding.
"We are in the economic equivalent of a national security crisis, and the challenges are great," Rudd said.
He referred to recent moves by other economies, such as Britain, Germany and Ireland, to extend guarantees or state aid to their banking systems and said Australian banks could be disadvantaged if his government failed to act.
"I don't want a first-class Australian bank discriminated against because some other foreign bank, which has a bad balance sheet, is being propped up by a guarantee by a foreign government," Rudd told reporters.
"This measure puts our banks on a similar footing to other banking systems around the world."
Australia would also make an extra A$4 billion available for mortgage-backed securities market to help maintain liquidity for non-bank lenders, Rudd said, adding that the measures were part of an international response to the crisis.
There was no threat to Australian deposits before Sunday's announcements, according to Australian Bankers' Association Chief Executive David Bell.
"But if it does give people extra confidence then this must be viewed as a good thing," Bell said.
Rudd said his government was in close contact with other nations, including the G-20, and coordinated action was crucial.
http://money.ninemsn.com.au/article.aspx?id=645920
The benchmark ASX 200 gained 5.7 percent in the first 15 minutes of trading and traded as high as 6 percent, pushing the index above the 4000 point level and recouping some of the market's massive losses from last Friday. Early deals saw more than $46 billion flood back into the market.
The market lost 8.3 percent last Friday, bringing weekly losses on the ASX200 to nearly $150 billion.
Prime Minister Kevin Rudd called a snap news conference on Sunday to say his government would guarantee Australia's entire deposit base of $600-$700 billion for three years and guarantee wholesale bank funding.
"We are in the economic equivalent of a national security crisis, and the challenges are great," Rudd said.
He referred to recent moves by other economies, such as Britain, Germany and Ireland, to extend guarantees or state aid to their banking systems and said Australian banks could be disadvantaged if his government failed to act.
"I don't want a first-class Australian bank discriminated against because some other foreign bank, which has a bad balance sheet, is being propped up by a guarantee by a foreign government," Rudd told reporters.
"This measure puts our banks on a similar footing to other banking systems around the world."
Australia would also make an extra A$4 billion available for mortgage-backed securities market to help maintain liquidity for non-bank lenders, Rudd said, adding that the measures were part of an international response to the crisis.
There was no threat to Australian deposits before Sunday's announcements, according to Australian Bankers' Association Chief Executive David Bell.
"But if it does give people extra confidence then this must be viewed as a good thing," Bell said.
Rudd said his government was in close contact with other nations, including the G-20, and coordinated action was crucial.
http://money.ninemsn.com.au/article.aspx?id=645920
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