Australian Banks: Government Guarantee

SYDNEY -- Australian Prime Minister Kevin Rudd said Sunday the government will guarantee all bank deposits for a period of three years.

It brings Australia into closer alignment with other countries that have recently put in place their own bank-deposit guarantees as part of efforts to combat the escalating global financial crisis.

Wall Street Journal


Can someone explain how this is possible. Maybe I don't understand, but if all the money in the people's bank accounts is gone, how does the government find the funds to pay for 20million peoples deposits for three years. The deposits are uncapped aparently. That could be an enormous sum of money.

And what if when the time comes, they can't do as promised, who can be held accountable.

To be honest, I don't buy it...

Maybe it isn't that much money? I heard someone say that leaving the cap at 20K was going to protect 85% of Australians. Maybe protecting all wouldn't be that much.

You have to remember that most Australians are highly leveraged. Most of us are in serious debt. I don't think many people have that much savings. Which is bloody scary.

From what I'm hearing as well Australian banks aren't feeling the crunch like elsewhere around the world. As a matter of fact the National Bank Just bought out Bankwest for $2 billion last week, I doubt they would do that if they thought they might be going under.

Australian banks are pretty safe.

However. With other banks elsewhere offering large deposit guarantees, the fear was that Australians would simply do a run on the banks here and put them into other banks that had the larger guarantee.

That's why they've upped the guarantee.

The problem now is the big banks currently buying out smaller lenders - bye bye competition.

[edit on 12-10-2008 by mattguy404]

True, but i'm still not sure where any of the money could come from. Isn't the governments funds invested in the same way that ours is, through the financial market?

I don't think the Australian banks will have a big problem either but with the markets falling the move does need questioned.
If they just create the money to pay the people it will cause inflation and be pointless.

[edit on 12/10/2008 by Sloth]

Originally posted by Chadwickus
the National Bank Just bought out Bankwest for $2 billion last week, I doubt they would do that if they thought they might be going under.

Yeah the Commonwealth Bank of Australia bought out Bankwest for a good price because Bankwest's owner in the UK is going broke or something, even though Bankwest over here was making a profit.

Originally posted by Sloth
True, but i'm still not sure where any of the money could come from. Isn't the governments funds invested in the same way that ours is, through the financial market?

According to the ABC it's a 700 Billion dollar guarantee all up. I personally can't see a run on our banks happening any time soon

reply to post by dr_chimichanga



Ahh my bad, Commonwealth bank, yeah Bankwest spent a huge amount of money during the Olympics to advertise their expansion into the Eastern states.