Govt introduces bill to guarantee bank deposits
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Federal Treasurer Wayne Swan has introduced a bill that provides an unlimited guarantee on all deposits in Australian banks.
The Government announced the measures on Sunday after the global financial crisis worsened.
The gurantee covers deposits from individuals, businesses and foreign loans made by Australian banks.
It will last for three years, after which the Government may decide to set a cap on the amount it will cover.
Mr Swan says the bill will help financial regulators keep a close eye on the industry.
"It gives APRA [Australian Prudential Regulation Authority] the power to respond more swiftly and decisively to deal with institutional distress," he said.
"The measures in this bill will allow ordinary Australians and their financial time zones to move ahead in the future with confidence."
The Government will charge the banks a fee, which will be determined for each institution by Treasury and The Australian Prudential Regulatory Authority (APRA).
Speaking at the National Press Club today, Prime Minister Kevin Rudd said the liability of the gurantee to the Government will be made public, but he has not said when.
"We are completely confident about that, we think it's the right course of action," he said.
Mr Rudd says the measure is necessary to ensure Australia's banks can compete against international banks who had been given the same gurantees.
"We took this decisive action in close consultation with the regulators," he said.
