Australia to guarantee all bank deposits: PM

The Australian government will guarantee all deposits held in domestic financial institutions, Prime Minister Kevin Rudd said today, amid the global financial crisis.    
 
"The Australian government will guarantee all deposits, whatever their size, in all Australian banking institutions for three years," Rudd told reporters in Canberra.       

Rudd, who has held two-days of crisis talks with top officials on the financial turmoil sparked by the credit crunch, said the government will also guarantee all wholesale term funding by Australian banks operating in international markets.     

The government would also inject a further $2.6 billion into residential-backed securities to support the domestic mortgage market.     

The prime minister said the new measures were designed to help "unclog the arteries of the global financial system" which had been hit by fears that banks would fail.      

The prime minister said while Australia's banking institutions were well-capitalised and profitable with high asset quality, the country's financial system was being affected by global events.     

"This global financial crisis is entering a new and dangerous phase with real consequences for growth, for jobs, and therefore for the future," he said.      

Rudd said he wanted Australians to feel reassured that their money was safe and to help domestic financial institutions compete on the global market.      

He said he could not stand idly by as foreign governments offered assurances to their banks which would disadvantage Australian institutions.