The Austrian government decided Wednesday to provide unlimited protection for private savings and to guarantee bank liquidity, according to Chancellor Alfred Gusenbauer and Vice Chancellor and Finance Minister Wilhelm Molterer, reported dpa. By doing away with the 20,000-euro (27,100-dollar) limit on savings guarantees, Austria was following the lead of Germany, which announced Sunday it would introduce unlimited protection. European Union finance ministers agreed Tuesday in Luxembourg to raise deposit guarantees to at least 50,000 euros, but many EU members are set to raise the limit to 100,000 euros. If needed, the Austrian government would also assume liabilities and provide guarantees for key financial institutions, the collapse of which could affect other lenders, Molterer said. A clearing point for banks seeking additional financial liquidity would be created as well, Molterer said. Banks would be asked to shift their excessive liquidity to the Oesterreichische Kontrollbank, a credit institution owned by Austrian commercial banks. Infrastructure Minister Werner Faymann said Wednesday there was "no reason to panic" about banks. After early elections in late September, Social Democratic leader Faymann is set to replace Gusenbauer as Austria's new chancellor. On Monday, Molterer said the raise in deposit guarantees was meant to prevent Austrian funds from shifting to Germany.
