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Australia and New Zealand Guarantee All Bank Deposits

Peter Cassata | October 12, 2008

On Sunday, Australia and New Zealand pledged to guarantee all bank deposits in a coordinated effort to curb further losses to their currencies and markets.  Australia's S&P/ASX 200 Index fell 16 percent last week while New Zealand's NZX 50 dropped 11 percent.  According to the Financial Times, the countries had been the only two in the developed world not to provide a government-backed bank deposit guarantee.

Australia's guarantee covers the country's entire deposit base of approximately A$600 ($395.5) billion to A$700 ($461) billion and will last for three years.  New Zealand, which is presently in a recession, will guarantee all institutions with less than NZ$5 ($3) billion in deposits for two years, while larger institutions will be charged a 0.1 percent annual fee for the guarantee.

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