EU ministers meeting in emergency talks in Luxembourg on Tuesday agreed on steps to stabilise the situation for European banks, hit or under threat by the global financial crisis.
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Few Czechs satisfied with democracy - poll ... to raise the guarantee for customersâ savings accounts to a minimum of 50,000 euros, around double the amount currently provided in most countries including the Czech Republic. The move is aimed at calming savings account holders and, by turn, renewing confidence in banks hit hard in the on-going crisis.
So far, this is a crisis that has passed the Czech Republic by but that doesnât mean safety measures wonât be adopted. EU finance ministers agreed on Tuesday on a number of steps aimed at providing stability for banks, and for reassuring savings account owners â everyone from individuals to small business owners - that their deposits are safe. At stake: raising the deposit insurance limit country-by-country to 50,000 euros per deposit, more than double the limit of 20,000 until now set by the European Union. In the Czech Republic, the limit has been slightly higher: 25,000 euros. I asked Pavel MertlĂk - an analyst for Raiffeissen Bank and former finance minister - how he saw the steps now to be taken by the Czech Republic:
âI think that raising the level of insurance is a much better solution than, for example, to grant general guarantees as was done in Germany. I think itâs reasonable and that it should calm the European public. This is the reason why this move was taken. The deposit insurance scheme is like any other insurance: preparation for future possible negative developments. Even as the Czech crown has been appreciating on a long-term basis, a certain indexation I would say of the deposit insurance scheme was needed because the value of the insurance declined over the last five years. This makes sense for the Czech Republic, and is not really a big change or a âdoublingâ or as big an increase as it is for most western European countries.â
Some have countered that the move in the Czech Republic was not really necessary â after all the country finds itself in a far different situation from some of its western neighbours, its banking sector largely sheltered from the crisis due to very little exposure to toxic debt. But Finance Minister Miroslav Kalousek nevertheless views the move as an acceptable compromise, especially in comparison to steps by some European governments â including Germanyâs and Austriaâs - to provide 100 percent blanket guarantees. He sees such guarantees as unaffordable. Doubling the deposit insurance was, for him, more acceptable. Pavel MertlĂk again:
âIn the situation which exists in the eurozone the press and the stress for increasing the level of insurance was probably very strong.â
The finance minister has pledged to push through an amendment on the compulsory limit, changes which will be permanent, through Parliament as soon as possible. He also said that additional special measures would not be necessary. Leading Czech banks meanwhile have generally welcomed the move: on Tuesday Äeska spoĹitelna, the countryâs largest retail bank, said that the step would âstabilise the situation as well as clientsâ perceptionâ, again repeating - as banking houses here have throughout this crisis - that the Czech banking market is healthy.
(radio-Prague)
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