Germany's finance ministry has agreed a 50bn euro ($70bn; £40bn) plan to save one of the country's biggest banks.The deal, reached with private banks, to save Hypo Real Estate is worth 15m euros more than the first rescue attempt, which fell apart on Saturday.
Germany earlier announced an unlimited guarantee for all private savings, a move followed later by Denmark. Germany's finance ministry said that with the "mutually agreed solution" Hypo Real Estate would be stabilised, and "Germany strengthened as a place to conduct finance in difficult times". Earlier, German Chancellor Angela Merkel moved to reassure German savers that all their deposits would be safe. Similar unilateral guarantees issued by the Irish and Greek governments last week were criticised in Berlin and other European capitals. But after an emergency meeting with the central bank earlier, Ms Merkel said: "We will not allow the distress of one financial institution to distress the entire system. For that reason, we are working hard to secure Hypo Real Estate.
Sunday, October 5, 2008
Germany to save the Country's biggest banks
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Previously the FDIC insured banks of $100,000 per account, and in effort to increase consumer cofidence, The Emergency Economic stabilization act of 2008 increased the insured amount to $250,000.
In this case, Germany has taken more drastic measures of willing to insure an unlimted amount for bank accounts. This huge commitment to consumers was done to minimize any unnecessary withdrawl and credit transfer. I feel that this would help to prevent credit crunch.
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