Berlin: With Germany making a blanket guarantee to cover all of the country's savings, other European countries were under increased pressure today to bolster their financial defences.

While Britain was likely to be the first to feel the pressure of the German move, eurozone finance ministers meeting in Luxembourg would also be under the gun to flesh out plans for restoring confidence in the crisis-struck banking system after weekend talks among Europe's biggest economic powers.

While Germany had criticised moves by Ireland and Greece to guarantee bank deposits, yesterday it reversed course and announced an unlimited guarantee for personal savings deposits, looking to shore up confidence in a country where failing banks evoke bitter memories of the Great Depression that helped bring the Nazis to power.

"We tell all savings account holders that your deposits are safe. The federal government assures it," German Chancellor Angela Merkel said after an emergency government meeting in a bid to prevent a panic run on banks.

The country later announced a USD 70 billion rescue of its fourth-largest bank, Hypo Real Estate (HRE), in its largest-ever bank rescue.

The German reversal on savings ratcheted up pressure on Britain, which has also opposed giving a blanket guarantee on all bank deposits.

Finance minister Alistair Darling could outline the British response as soon as in a speech to lawmakers today.

As he seeks solutions to the crisis, which ministers will discuss in a meeting of the new emergency economy committee Monday, Darling is reportedly mulling using public funds to take stakes in banks to help shore them up.
Source : PTI