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French government guarantees all bank savers’ deposits |
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Thursday, 02 October 2008 |
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President Sarkozy said it in his speech in Toulon. Now Employment Secretary Laurent Wauquiez, who reports to Finance Minister Christine Lagarde has confirmed it in a television interview. Your money is safe in a French bank.
The precise words uttered by the President were “not a single depositor will lose a single Euro because a financial establishment turns out to be unable to fulfil its obligations”. Laurent Wauquiez twice said that no “saver will lose his money” and added “I give my word supported by the President.” So far the commitment is not being translated into law but it is a political commitment that it would be political suicide not to honour. Ireland has already moved to provide savers the same 100% guarantee. The assumption would seem to be that the government does not think that they will be called upon to pay up very often. The legal amount guaranteed is €70,000 per account which covers most customers. What is vague so far is how far the President intended to go. Does his commitment cover businesses including small businesses? Are they savers?
There is now concern at the European Commission in Brussels that if some countries guarantee all savings and others do not, it is unfair competition. As President for the time being of the European Union, Sarkozy has called a meeting of the big five EU countries, Germany, France, Italy, Spain and Britain with European Central Bank President Jean-Claude Trichet and Commission President José Manuel Barroso to consider joint measures to protect the European banking system. So far only Britain has shown reluctance to attend. Remarks by Christine Lagarde in the German financial newspaper Handelsblatt this morning of a joint fund to help banks has been rejected by German government spokesmen and disowned by a French government spokesman who “categorically denied” that any such fund was under consideration.
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