Govt raises deposit-account guarantee limit to €100,000
The Government is increasing the statutory guarantee limit for bank deposits from €20,000 to €100,000 per person.
The guarantee level will also apply to credit union savers.
The move comes at the end of one of the most turbulent financial weeks in history.
Making the announcement, Finance Minister Brian Lenihan said: “The Central Bank and financial regulator have stressed the soundness and stability of the Irish financial system.
“This measure provides additional reassurance to depositors in Ireland that their savings are safe. The new guarantee level is now among the highest in the EU.”
The new measure, which covers 100% of the saver's deposit below the threshold, takes effect from today and is five times the old limit.
Mr Lenihan added: "I want it to be known that the Government is confident about the strength and resilience of the Irish financial system.
“The Government is committed to the stability of our financial system, so that money placed with an Irish credit institution would not be at risk.
“As I said yesterday, the Irish Government wants to protect the whole financial system, secure its stability and ensure that all deposits in Irish banks are safe.”
It means Ireland will have one of the highest levels of guarantee of any country in Europe, above Britain and the Netherlands.
Changing the guarantee has been under consideration for some time but this development follows a turbulent week on the stock exchanges and the bankruptcy of American investment bank Lehman Brothers.
The crisis grew more acute this month with government takeovers of mortgage companies Fannie Mae and Freddie Mac, Merrill Lynch’s agreement to be bought by Bank of America and a bailout of insurer American International Group (AIG).
Mr Lenihan added: “I want it to be known that the Government is confident about the strength and resilience of the Irish financial system.
“The Government is committed to the stability of our financial system, so that money placed with an Irish credit institution would not be at risk.
“As I said yesterday, the Irish Government wants to protect the whole financial system, secure its stability and ensure that all deposits in Irish banks are safe.”
Legislation will be introduced in the Dáil shortly. There will be steps to increase the amount of money set aside for the fund, in consultation with financial institutions.
Fine Gael finance spokesman Richard Bruton said the minister was adopting his party's proposals of a year ago.
“I welcome the move today by the Minister for Finance to make just such a move and believe it will help calm some nerves to a jittery market,” he said.
“It is unfortunate however that the move was yet another reactive rather than proactive initiative from the Government.
“A move in this direction a year ago would have had the effect of reducing the scope for fears with depositors in today’s even more uncertain period.”
