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German savers get 100% guarantee

The German government announced yesterday that it would guarantee all private savings accounts, worth approximately £390bn, in order to increase confidence in the financial system.

According to the International Herald Tribune, Chancellor Angela Merkel and Finance Minister Peer Steinbrück assured savers they would seek any necessary legislation to carry out the guarantee.

Steinbrück said: “This is an important signal so that it comes to some calming down, not to reactions that would be out of proportion and would make our crisis management and crisis prevention that much more difficult.”

German deposits are guaranteed through a mixture of deposit insurance plans, with a state fund stepping in in the first instance. Public, private and community banks also contribute to a rescue fund.

The Finance Ministry said the new blanket guarantee would be effective immediately, although it was unclear whether new legislation would be needed.

Merkel added that bankers would be held to account for their part in the financial crisis.

She said: “We are also saying that those who engaged in irresponsible behavior will be held responsible. The government will ensure that. We owe it to taxpayers.”

Officials in Berlin have agreed a £38.7bn bailout for Hypo Real Estate, a major German property lender based in Munich and member of the benchmark stock index.

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