EU raises minimum bank deposit guarantee to $50,000

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Egyptian Finance Minister Youssef Boutros-Ghali and Luxembourg's prime minister Jean-Claude Juncker. Photo: EFE

The European Union said Tuesday it will raise its minimum bank deposit guarantee to $50,000 (US$68,160) 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 were unable to agree France's proposal to hike the current $20,000 minimum to $100,000 (US$136,320).

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 stay in daily contact to discuss the crisis and “ensure a comprehensive and coordinated response to the current situation.”

European governments have talked about the need to seek common measures against the crisis, but several countries have so far taken decisions on raising deposit guarantees on their own.

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

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