Well, against all the odds, against everything they said in the media over the last couple of weeks, Germany has guaranteed all private savings. There is still confusion over the detail but, if true, this is a real u-turn. Still, there is some thought that there might be a limited amount available to fund the ‘unlimited’ guarantee. The fact is that not all banks will collapse and you don’t really need the full amount of savers’ deposits to be held in reserve by governments in order to create an effective guarantee. Almost incidentally, the germans bailed out their second largest commercial property lender, Hypo Real Estate.
Similar unilateral guarantees issued by the Irish and Greek governments last week were criticised in Berlin and other European capitals.
BBC News 24
Denmark has also guaranteed private savings. Denmark has a population of around 5.5m and a nominal GDP of around $300bn.
There is now increasing pressure on other nations, including the UK, to follow suit and guarantee all savings. Meanwhile, many politicians are talking in vague terms about some sort of retribution for the irresponsible executives of failing financial institutions. I doubt much will come of that, perhaps a few scapegoats.