LUXEMBOURG - France says the European Union will raise the minimum banking deposit guarantee to 50,000 euro (S$73,000).
But French Finance Minister Christine Lagarde says EU finance ministers are unable to agree hiking the level to 100,000 euro as France had wanted. The EU has a 20,000 euro minimum but several countries have higher limits and some have raised them on their own in recent days.
ECB pumps US$50b into mkts
FRANKFURT - THE European Central Bank on Tuesday pumped 50 billion dollars (S$73.1 billion) back into interbank money markets in what has become a daily attempt to keep cash flowing through the key financial pipeline.
The results of the ECB's one-day offer, including demand and the rate at which the dollars are lent, were to be released later in the day.
EU fails to agree insurance shake-up despite crisis
LUXEMBOURG - EU finance ministers failed on Tuesday to agree a shake-up of how the insurance sector is regulated, an official said, despite the growing sense of urgency to improve oversight of the financial sector.
The official said, on condition of anonymity, there was 'no agreement' at a meeting in Luxembourg and that the ministers would revisit the issue the next time they meet in November.
She says EU governments want 'to guarantee the solidity and stability of the banking system'. Ms Lagarde told reporters after talks on Tuesday between the 27 EU finance ministers that European leaders are 'prepared to envisage all measures to obtain this objective'.
Earlier on Thursday, the ministers were considering ramping up the minimum level of bank deposit guarantees in Europe to as much as 100,000 euro.
'We must restore confidence at a European level to the banking system,' said Irish Finance Minister Brian Lenihan as he arrived for the talks in Luxembourg, confirming that a 100,000-euro limit was 'under examination'.
In a joint declaration on Tuesday, EU nations pledged to protect the stability of financial system with 'liquidity support through central banks, action to deal with individual banks or enhanced depositor protection schemes'.
A coordinated European response to the crisis has been slow in coming despite the leaders of Britain, France, German and Italy meeting over the weekend, with Berlin opposing a proposal to create a European-wide bank rescue fund.
In the absence of EU-wide action, a growing number of European countries have rushed to raise their minimum guarantee on bank deposits in hope of boosting confidence.
Currently EU law requires member states to guarantee savers' deposits to at least 20,000 euros in case a bank goes bust, although some states have long offered much higher protection.
After Germany offered a blanket guarantee on bank deposits on Sunday, Austria, Britain, Denmark, France, Portugal, Spain and Sweden indicated they had similar plans in the works.
Ireland triggered the rush last week with a law offering an unlimited guarantee on all deposits at its biggest banks.
However, Ireland has come under fire from its EU partners for the move because it covers a wide range of bank operations at its six biggest banks, raising fears they could have an unfair advantage over rivals from other countries.
It also raised concerns that it could encourage people to flock to Ireland to park cash in Irish accounts, causing deposits to flow out of banks elsewhere in Europe.
'One country's solution is the other country's problem. We really have to push for a common solution,' said Swedish Finance Minister Anders Borg.
In a meeting with Lenihan on Monday, EU Competition Commissioner Neelie Kroes asked Ireland to take measures over 'distortions in financial flows.' Meanwhile, economists at investment bank UBS raised doubts over such ambitious guarantee schemes.
'The guaranty is not credible per se: if a run on bank was to happen the governments would not be able to fully guaranty the deposits,' economists at investment bank UBS said in a research note.
'The guaranty will be efficient only to the extent that it is self-fulfilling: because there is a state guaranty, there is no reason for a run on bank, hence the state guaranty is not needed/used,' they added. -- AFP
