PARIS/WASHINGTON - ACROSS the globe, countries on Sunday rushed to guarantee bank deposits to combat the global credit crisis.
Australia will guarantee all bank deposits for three years and guarantee wholesale funding to Australian banks, Australian Prime Minister Kevin Rudd said.
Australian will also make an extra A$4 billion (S$3.82 billion) available for mortgage-backed securities to help maintain liquidity for non-bank lenders, Mr Rudd told reporters, adding the measures were part of an international response to the crisis.
A government spokesman later said the Australian move was being coordinated with neighbouring New Zealand.
Under the plan, all deposits in Australian banks, building societies and credit unions, would be guaranteed by the Australian government for the next three years.
Australia to guarantee deposits
New Zealand's government said it would guarantee all retail bank deposits for a period of two years in a bid to reassure savers amid ongoing global financial turmoil.
'The deposit guarantee is designed to give assurance to New Zealand depositors,' Finance Minister Michael Cullen said in a statement.
'The New Zealand banking system remains sound. We want to ensure that ordinary New Zealanders feel that their deposits are safe in the current uncertain international financial market conditions.'
The deposit guarantee is an opt-in scheme in the form of a 'bilateral contractual agreement between the Crown and the individual institutions,' the statement said.
The government of Prime Minister Helen Clark is offering the scheme for an initial two-year period, it said, adding that this would 'give time to see how well international financial markets stabilise in the months ahead.'
Gulf Arab states also took measures, including a rare Saudi interest rate cut and a pledge by the United Arab Emirates to protect national banks and guarantee deposits.
The UAE cabinet also decided to ensure that no local bank will be exposed to credits risks and to guarantee inter-bank lending among all banks operating in the country, state media WAM said.
The UAE, the first oil-rich Gulf country to take drastic measures to protect depositors from the global financial meltdown, will also pump the necessary liquidity into the banking system if required, WAM said.
UAE guarantees bank deposits
Portugal's finance minister announced on Sunday that his government was offering a 20-billion-euro (S$39 billion) state guarantee for banks endangered by the global financial crisis.
'These state guarantees will be up to 20 billion euros,' Fernando Teixeira dos Santos said.
While calling Portugal's financial system 'solid,' the minister said the measure was necessary due to the global crisis that has dried up lending between banks and threatened the wider economy.
The French government will on Monday propose a law designed to offer a state guarantee for banks endangered by the global financial crisis, a ruling party deputy said on Sunday.
Gilles Carrez, a senior member of the parliamentary finance committee, told AFP that the law would be unveiled at an emergency cabinet meeting called by
A second ruling party parliamentary source said that the law would be brought to a parliamentary vote 'sometime during the week.'
Mr Sarkozy is due to address the nation in a televised speech on Monday that will follow the emergency cabinet meeting.