Government Wades Into Economic Problem

Following the Government's earlier economic manoeuvring, the State has now stepped up its input to the economy with a bold move to stabilise Irish finances.

The recent dramatic intervention aims to shore-up confidence in the Irish financial sector with a new guarantee for savings of up to €100,000.

The unexpected move is the first stage of the response from the Government and the Financial Regulator to the international financial crisis.

The new guarantee for savings is just under five times the previous limit and will now apply to banks, building societies and credit unions from Sunday.

In his announcement, Finance Minister Brian Lenihan said money placed with Irish credit institutions would not be at risk.

The move comes as the Government took its first steps in trying to engender stability by copying the policy of the UK and banning short-selling last week.

Now the limit of €100,000 brings the loss guarantee on savings up to the level of the UK also.

It is thought the policy was prompted by the news the Anglo Irish Bank's proposed takeover of Irish Nationwide Building Society would not go ahead unless the Government guaranteed against future losses from the society's €12 billion in loans.

(DW)