EU raises bank deposit shield

December 18, 2008

, STRASBOURG, Dec 18 – Lawmakers at the European Parliament approved on Thursday plans requiring EU states to guarantee bank deposits up to 100,000 euros (146,000 dollars) in case of bankruptcy instead of 20,000 euros currently.

The plans, adopted with 556 votes in favour, 21 against and three abstentions, are aimed at reviving confidence in the banking system in the wake of the worst financial crisis in generations.

In a first stage, the minimum state guarantee on bank deposits in the 27-nation European Union will be lifted from 20,000 euros to 50,000 euros in June 2009.

The minimum will then be raised by the end of 2010 unless not all member states are deemed to be able to do so.

The plans also reduce the amount of time governments have to reimburse depositors in the event that their bank goes bust.

Governments would have to pay depositors within 30 days, down from three months currently — a limit which can be extended to as much as nine months.

The plans still have to be approved by member states.

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