EU raises banking guarantee to EUR 50,000

8 October 2008

LUXEMBOURG — The European Union said Tuesday it will raise its minimum bank deposit guarantee to EUR 50,000 as they agreed on guidelines to deal with banks in danger of collapse amid the global financial crisis.

But French Finance Minister Christine Lagarde said EU finance ministers did not agree on France’s proposal to raise the current EUR 20,000 minimum to EUR 100,000.

In a joint statement, EU finance ministers said they "all commit to take all necessary measures to enhance the soundness and stability of our banking system and to protect the deposits of individual savers".

They said they would remain in daily contact to discuss the crisis and "ensure a comprehensive and coordinated response to the current situation".

European governments discussed the need to seek common measures against the crisis, but several countries raised deposit guarantees on their own.

The statement agreed on some general principles for what EU nations could do to save struggling banks, saying financial support should be temporary and governments should be careful with taxpayers’ money.

"Existing shareholders should bear the due consequences of the intervention", they said, stressing that governments should be able to get rid of management, and executives of failed companies should not receive "undue benefits".

[AP / Expatica]