The guarantee of all Australian cash deposits in unprecedented action to safeguard the nation's banks has been applauded by the banking sector.
Prime Minister Kevin Rudd yesterday announced that all bank deposits will be guaranteed as part of the Rudd government's plan to improve the stability of Australia's financial sector.
Abacus Chief Executive Louise Petschler says it will restore confidence.
“It’s a strong message for Australians that your money is safe in your bank, in your building society, or in your credit union – not just protected by our strong credential system, but now also guaranteed by the Australian government.”
The announcement came after two days of crisis talk in Canberra - the prime Minister unveiled three new measures to safeguard Australians from the global financial turmoil.
The commonwealth will guarantee all deposits to all Australian financial institutions under its financial claims scheme for three years, regardless of the amount.
The Rudd government will also guarantee all term wholesale funding by Australian banks operating in international markets, in a bid to improve the future availability of credit.
Mr Rudd says the measures will ensure the banks have access to credit in the future.
“We’re in the business of encouraging the full implementation of its recommendations across the global financial community.
“The core of which lie are the recommendations concerning transparency, because the transparency concerns which have been evidence in the various financial instruments used by US investment banks in particular have in part gone to the heart of the problem.”
Federal Opposition Leader Malcolm Turnbull has welcomed the move, but says he's disappointed at being snubbed, after raising the issue with Mr Rudd last month.
“I wrote to the Prime Minister and urged him to sit down with us to discuss an effective national response to this global financial crisis on a bi-partisan basis - I haven’t even had the courtesy of a reply to that letter.
“Now I think it’s clear from the Prime Minister’s decisions today that there is a common commitment.”
