Mixed Reactions to Ireland's Bank Guarantee

Taoiseach Brian Cowen (on the left), who is currently on a visit to Paris, has said that his 100% bank guarantee scheme has received the full political backing of French President Nicolas Sarkozy (on the right).

Cowen told reporters he thought that President Sarkozy, whose country holds at present the rotating six-month presidency of the EU, "understood precisely" the reasons the Irish government had to act in such a decisive way.

Shares in Irish banks are continuing to recover from their massive losses, after the government's plan to guarantee their deposits and debts has been published.
Dublin's ISEQ index closed 2.5% higher at 3641, with the banking stocks gaining between 8% and 10.5%. They are not out of the woods yet, but the trend begins to look a little more positive.

In London the FTSE closed 1% higher, and other European stocks mainly rallied as well.

Meanwhile, EU Competition Commissioner Neelie Kroes has appealed to national governments "not to act unilaterally" in the current financial crisis, and to consult the commission especially on the question of offering state aid to financial institutions.
Speaking at a press briefing in Brussels, Ms. Kroes said that the EU Commission is in close contact with several governments, including the Irish, but declined to comment on individual cases.

The British government, which has come under pressure from the public and parts of the media to follow Ireland's example, wants the Irish to look closely at their guarantee to make sure it complies with EU law. This is of course a smoke screen. The real reason for British concern is that savers and investors who have their money in British banks might transfer it to Ireland, where it is now absolutely safe, while Britain still guarantees only a sum of £ 20,000.

Prime Minister Gordon Brown (left) said European governments should make sure that whatever actions they took to tackle the global financial crisis complied with EU competition law.

The President of the EU Commission, Jose Manuel Barroso, said that "the EU needs a shake-up of banking deposit insurance schemes", so that there will be more consistency across the Union.

Currently deposit guarantee schemes vary widely across the EU, with some countries offering much greater protection of depositors' savings than others. So far only Ireland has opted for a full 100% guarantee scheme, but it is possible that other countries might follow suit.

The Emerald Islander